problem 1: Why do you mean by capital budgeting analysis so significant to the firm?

problem 2: Describe the intuition behind the NPV capital budgeting frame-work?

problem 3: Describe what is meant by the term incremental cash flows of the capital project.

problem 4: What makes the APV capital budgeting framework helpful for analyzing the foreign capital expenditures?

problem 5: Relate to the concept of lost sales to the definition of the incremental cash flows.

problem 6: What problems can enter to the capital budgeting analysis if project debt is computed rather than the borrowing capacity made by the project?

problem 7: Illustrate the nature of a concessionary loan and how is it handled in the APV model?

problem 8: describe the intuition of discounting the different cash flows in the APV model at specific discount rates?

problem 9: In Modigliani-Miller equation, why is the market value of the levered firm more than the market value of an equal unlevered firm?

problem 10: Describe the difference between functioning the capital budgeting analysis from the parent firm’s viewpoint as opposed to the project viewpoint.

problem 11: State the concept of a real option. Describe some of the different real options a firm can be confronted with when investing in the real projects.