Capital budgeting (Investment decisions) is one of the most important critical p

Capital budgeting (Investment decisions) is one of the most important critical parts of a firm’s operations. It is to a business what a heart is to a human.
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discuss, expound and elucidate on the following:
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– Define and state the difference between the following capital budgeting tools: NPV, Payback Period, IRR, Profitability Index, and Incremental IRR.
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– Which method is the weakest, and which is the most robust?
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– Define, with an example, what is meant by Stand-Alone projects
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– Define, with an example, what is meant by mutually exclusive projects
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– Define, with an example, what is meant by mutually inclusive projects
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– Describe the investment decision rules for each of the capital budgeting tools for both stand-alone and mutually exclusive projects
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– Describe situations in which the profitability index cannot be used to make an investment decision
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– Discuss the reasons IRR can give a flawed decision
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– If the IRR and NPV rules lead to different decisions for a stand-alone project, which should you follow? Why?
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– For mutually exclusive projects, explain why picking one project over another because it has a larger IRR can lead to mistakes.
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– Explain why ranking projects according to their NPV might not be optimal when you evaluate projects with different resource requirements.
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– How can the profitability index be used to identify attractive projects when there are resource constraints?