Q.

7
Ans. Investment Multiplier:1. Project Valuation:Investment projects are classified as follows. According to project size, the
investment analysis is executed. Small projects may be approved by
departmental managers. More careful analysis and Board of Directors
approval is needed for large projects of, say, half a million dollars or more.
Similarly, according to types of benefit to the firm, they are as follows.

An increase in cash flow? A decrease in risk? And an indirect benefits?

(Showers for workers, etc).
According to degree of dependence, they are,

Mutually exclusive projects (can execute project A or B, but not both),

Complementary projects (taking project A increases the cash flow of project

B),

Substitute projects (taking project A decreases the cash flow of project B).
According to degree of statistical dependence,

Positive dependence,

Negative dependence,

Statistical dependence.

According to type of cash flow,

Conventional cash flows (only one change in the cash flow sign),

Non-conventional cash flows (more than one change in the cash flow sign).

Project valuation analysis stipulates a decision rule for accepting or rejecting

investment projects.
2. Capital Budgeting Techniques:Capital budgeting is the process most companies use to authorize capital
spending on long-term projects and on other projects requiring significant
investments of capital. Because capital is usually limited in its availability,
capital projects are individually evaluated using both quantitative analysis
and quantitative information. Most capital budgeting analysis uses cash
inflows and