ABSTRACT
Capital budgeting provides a perspective of the time required to pay back the investment costs of a potential capital initiative, but it does not consider the threshold period when the mathematical basis of break-even pro”tability occurs. Capital budgeting provides a perspective of current monetary values versus future monetary values, but it does not necessarily consider any form of what-if variations that may impact cash ¥ows and investment rates. Capital budgeting may reveal which capital investment initiatives may provide the greatest ”nancial value, through time, for an organization, but it does not determine whether capital assets must be leased or purchased. Capital budgeting innately incorporates rate risk within its rate computations but does not directly consider the ¥uctuations among rates that may yield a myriad of classi”cations of risk outcomes. Given these notions, it is determined that capital budgeting provides a sound method of facilitating human decisions with respect to a single instantiation of domain variables
but does not directly accommodate multiple variations of variable values that may a¡ect a single instantiation of the problem domain through time. erefore, capital budgeting paradigms, though powerful quantitative tools, are limited with respect to other factors that impact the analysis of ”nancial decisions through time.
