Business, 23.04.2021 14:00 tori829

. Capital budgeting is the process of identifying, analyzing and selecting investment projects whose returns are expected to extend beyond one year. This capital

budgeting decision for an investment requires the analysis of some factors. a. List and explain three (3) of these factors.

b. You have an investment opportunity that requires an initial investment of GH¢5,000

today and will pay GH¢6,000 in a year’s time. If an alternative investment with similar

risk pays 25%, should you invest?

c. You will retire in 18 years and you currently have GH¢250,000 saved, and your plan is

to have GH¢1,000,000 at your retirement. What annual interest rate must you earn to

reach this goal, assuming you do not save any additional funds?

d. With practical example(s), differentiate between compounding and discounting.

e. As a Business Finance student, what is the essence of the valuation principle in your

personal life?

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