Successful capital budgeting examples can be seen in projects that provide a higher return on investment (ROI). For instance, if a company has two projects: Project A requires a $100,000 investment with expected cash flows of $30,000 annually for five years, while Project B requires a $50,000 investment with expected cash flows of $15,000 annually for five years. By calculating the Internal Rate of Return (IRR) for each project, the company can determine which project provides a higher ROI. In this case, both projects can be considered successful if they meet or exceed the company's required rate of return.
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