In this report we will discuss about capital budgeting method and below are the summaries point:-
Capital budgeting method used by AES: Applied to all projects regardless of location, but failed when applied to international projects due to unrealistic NPV calculations.
Principal advantages: Maximize leverage, off-balance sheet treatment, reduced agency costs, and involvement of multilateral financial institutions.
Drawbacks: Lack of a comprehensive view of projects vs. division, complexity and management involvement, and failure to consider macroeconomic risks like exchange rate fluctuations.