CREATING VALUE: THE APPROPRIATE USE OF CAPITAL BUDGETING
Dr. Michael C. Ehrhardt
(Associate Professor of Finance, University of Tennessee, Finance Department, SMC‐424, Knoxville, Tn 37996–0540)
Dr. James M. Reeve
(Professor of Accounting, University of Tennessee, Accounting Department, SMC‐622, Knoxville, Tn 37996–0540.)
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Abstract
Traditional approaches to capital budgeting may be inadequate in today's complex business environment. This paper identifies problems with a narrow approach to capital budgeting and suggests several improvements. In particular, an example illustrates an option‐based approach to valuing managerial flexibility.
Citation
Ehrhardt, M.C. and Reeve, J.M. (1991), "CREATING VALUE: THE APPROPRIATE USE OF CAPITAL BUDGETING", Managerial Finance, Vol. 17 No. 5, pp. 3-13. https://doi.org/10.1108/eb013679
Publisher
:MCB UP Ltd
Copyright © 1991, MCB UP Limited