A Proposed Capital Budgeting Technique For Liquidity Constrained Small Businesses

John B. White, Morgan P. Miles

Abstract


Although the ad vantages of capital budgeting models using discounted cash flaws are well known, small businesses continue to rely on non-discounted techniques in making capital budgeting decisions. This paper analyzes the financial environment in which small businesses operate that makes traditional capital budgeting models inappropriate. A capital budgeting technique is developed that is sensitive to the needs of small businesses and also meets the three-fold criteria for capital budgeting methods.

 


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