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18 In most capital budgeting decisions the emphasis should be on reported earnings rather than cash...

18 In most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows.

True / False

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Answer #1

All the capital budgeting is based on the cash flow inflow and outflow during period of project. In the capital budgeting future cash flow is discounted to determine present value of future cash flow and care compare present value of future cash flow with cash out flow at beginning of the period. If present value of future cash flow is more than cash outflow then only project is accepted else project is rejected.

Since in capital budgeting cash flows are discounting which is one of the concept of time value of money. So capital budgeting relate to the concept of the time value of money.

So, Given statement is false.

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