As a CFO of a multi-national company, which capital budgeting technique would be required for all major projects? Why? Why not the others? 1. Net Present Value (NPV) 2. Internal Rate of Return (IRR) 3. Modified Internal Rate of Return (MIRR) 4. Profitability Index (PI) 5. Regular Payback 6. Discounted Payback As NPV is the best criterion due to being directly related to maximizing my stock’s intrinsic value, I would choose this technique. As maximizing stock increases intrinsic value
Words: 536 - Pages: 3
Davis-Knight Susan Friguglietti Edna Primas Ronald Rehn University of Phoenix-Online February 27, 2008 Capital Budget Policy and Process Capital budgeting is the process by which capital investment decisions are made. Capital can be described as an organization’s operating assets (Diamond, Hanson &, Murphy, 1994). The capital budgeting process includes "planning, setting goals and priorities, arranging financing, and identifying criteria for making long-term investments" (Diamond et al.
Words: 4291 - Pages: 18
Describe Public Budgeting system in Kosovo from preparation to implementation Author’s Name (Author’s Email) I hereby assure that I have written this paper on my own quoting all sources and references used. Author’s Name Public Administration Edition 2015/2016 Public Budgeting Essay Abstract The budget is one state’s most important economic policy instrument; as such it reflects its development priorities. The budget controls or regulates its revenues and expenditures over one
Words: 3375 - Pages: 14
Capital Budgeting Introduction A capital budgeting decision is characterized by costs and benefits that are spread out over several timeperiods. This leads to a requirement that the time value of money be considered in order to evaluatethe alternatives correctly. Although to make decisions we must consider risks as well as time value, I restrict the discussion to situations in which the costs and benefits are known with certainty. There are sufficient difficulties in just taking the time value of
Words: 3516 - Pages: 15
ELEMENTS OF MODERN FINANCE - MGCR-641 THE SUPER PROJECT EXECUTIVE SUMMARY PROBLEMS 1. Is General Foods using the proper capital budgeting methods in evaluating their potential projects? 2. Should General Foods invest in the Super project? In evaluating the Super Project, what are the relevant cash flows to use? In particular: • Test market Expenses • Overhead Expenses • Erosion of Jell-O contribution margin • Allocation of charges for the use of excess agglomerator capacity OPTIONS
Words: 2562 - Pages: 11
The misapplication of capital investment appraisal techniques Colin Drury Professor, University of Huddersfield, Huddersfield, UK Mike Tayles Lecturer, University of Bradford, Bradford, UK Surveys of capital budgeting practices in the UK and USA reveal a trend towards the increased use of more sophisticated investment appraisals requiring the application of discounted cash flow (DCF) techniques. Several writers, however, have claimed that companies are underinvesting because they misapply or misinterpret
Words: 6213 - Pages: 25
Question 1.1. (TCO A) In the United States, which of the following types of organization has the greatest revenue in total? (Points : 5) | Sole proprietorship C corporation S corporation Limited partnership | Question 2.2. (TCO A) The one thing that makes a corporation different from the other forms of business ownership is (Points : 5) | legally, the corporation is the same as its owners. it requires all owners to share liability equally
Words: 1911 - Pages: 8
Budgeting and Forecasting Instructor Corrigan Feb. 7th, 2010 Impacts on Forecasting Identify a minimum of three current environmental conditions that would impact the preparation of a forecast. Explain how and why they would impact a forecast. Examples are weather conditions, government regulations, war, political unrest, etc. A business forecast could be severely affected by any sort of unpredictable and often unpreventable environmental circumstance. Several of these environmental conditions
Words: 587 - Pages: 3
Differentiate among the various capital budget evaluation techniques. Several methods can be used to analyze capital budgeting projects: NPV, IRR, Payback and Accrual Accounting ROR. NPV and IRR are commonly used methods since they take into account time value of money. Payback and Accrual Accounting ROR are less preferred methods, they don’t take into account time value of money. Net Present Value (NPV) NPV determines whether a company is better off investing in a project based on the
Words: 545 - Pages: 3
HOW DO CFOS MAKE CAPITAL BUDGETING AND CAPITAL STRUCTURE DECISIONS? by John Graham and Campbell Harvey, Duke University* e recently conducted a comprehensive survey that analyzed the current practice of corporate finance, with particular focus on the areas of capital budgeting and capital structure. The survey results enabled us to identify aspects of corporate practice that are consistent with finance theory, as well as aspects that are hard to reconcile with what we teach in our business
Words: 10903 - Pages: 44
