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Capital budgeting decisions include determining when long term investments, such as an equipment purchase, are...

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Accounting

Capital budgeting decisions include determining when long term investments, such as an equipment purchase, are necessary and worth pursuing. One method of capital budgeting process is to determine the Net Present Value. Discuss in detail how to calculate net present value. In addition, explain why profitability, as a result of a purchase, must equal or exceed the cost of capital or purchase to be deemed worthy.

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