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ABC Company, Inc. is considering two “independent” capital budgeting projects.  If the firm                          &n

ABC Company, Inc. is considering two “independent” capital budgeting projects.  If the firm

                                                accepts one of these independent projects, then the other independent project will be eliminated

                                                from consideration. True or false

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Answer #1

Independent Capital budgeting projects means project whose cash flows will not be effected by other project's Accept or reject decision. It means cash flows from projects are independent of one another.

So firm may consider both the 'Independent' capital budgeting projects. It is not required to eliminate other projects.

Therefore, Statement is false that considering two “independent” capital budgeting projects, if firm accepts one of these independent projects, then the other independent project will be eliminated from consideration.

Answeri is False.

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