What types of decisions would need to be made before the investment is made? Indicate the main kinds of information/data needed to evaluate this capital investment project. Capital budgets are used for acquisitions of costly assets with lifetimes that extend beyond the year in which the item is acquired. Common examples of capital items are buildings and equipment. Because of the high cost and long lifetimes of many capital acquisitions, it is necessary to take into account the impact of interest over the capital assets lifetime. This requires careful investment decision analysis. The underlying principle of time-value of money is that a dollar today is worth more than a dollar tomorrow due to the effects of inflation. Time-value analysis is the foundation for evaluating capital projects, where cash flows differ over the years, but need to be compared with each other in order to make wise investment decisions.
