differences between amortizations of flotation costs. The next page contains a general format for constructing the relevant cash flows used in determining whether a bond refunding is advantageous or not. Note the similarity to the Purchase/Replacement format that we encountered previously during Capital Budgeting (this is, after all, a capital investment project itself). CASH FLOW ANALYSIS BOND REFUNDING DECISION Today Intervening Years
Words: 447 - Pages: 2
Capital Budgeting Assignment 2 Ebony N. Robinson FIN 534: Financial Management January 30, 2011 Professor: Dr. Glenn L. Stevens Strayer University Abstract The Net Present Value rule states that when making an investment decision, choose the project with the highest NPV. If the objective is to maximize wealth, then “the NPV rule always gives the correct answer (Berk and DeMarzo, 2011).” According to the text, we use the NPV rule to evaluate capital
Words: 791 - Pages: 4
more customer entering the café premises as the business progresses. LO1: Understand the source of finance available to a business 1.1 Identify the sources of finance available to the business Owners Investment: This is the money or cash which comes from the owners savings it may be in the form of start-up capitals which are used when the owner is setting up the business or it can also be in the form of additional capital which can be used for business expansion, as this can be a long
Words: 3309 - Pages: 14
or investments which can increase the value of the organization. Cash flow is a very important especially to have a high and strong cash flow because this helps the organization build value. Poor cash flow can restrict organizations from new projects and handling their debt to creditors properly. If the poor cash flow were to continue with creditors this could eventually lead to bankruptcy for the organization. Capital budgeting is a way that organizations use to invest in the capital assets. Consideration
Words: 1531 - Pages: 7
estimate the Year 1 operating cash flow for a project with the following data. What is the Year 1 operating cash flow? Sales revenues: $15,000 Depreciation: $4,000 Other operating costs: $6,000 Tax rate: 35% | | | Student Answer: | | $7,250 | | | | $7,431 | | | | $7,617 | | | | $7,807 | | | | $8,003 | | | | Points Received: | 6 of 6 | | Comments: | | | | 2. | Question : | Which of the following is not a cash flow and thus should not be
Words: 389 - Pages: 2
How to Manage a Household Budget on Low Income Manage a Household Budget on Low Income It can be hard living on a limited amount of money each week for your family. When there's a failing economy or a lack of jobs in your area, it can be hard trying to decide how your family will get by on a limited budget. While life may throw you some hardships that you will have to make it through, there are ways to be able to pay your expenses and get the necessities that you need for living. Read on to learn
Words: 606 - Pages: 3
several years. These proposals must be reviewed and revised in the light of more recent information. This review and revision process frequently takes place as part of the annual budgeting process, and it may result in important decisions being taken on possible activity adjustments within the current budget period. The budgeting process cannot therefore be viewed as being purely concerned with the current year - it must be considered as an integrated part of the long-term planning process. The conventional
Words: 3217 - Pages: 13
Involving employees at all levels of the organisation in the budgeting process: 1. Participative budgeting (bottom up approach) 2. Top-down approach 3. Line-item budgeting (spend up to the specified amount on each line item) Adv: Tight control reduces likelihood of managers doing things for self-interest. Disadv: Inflexible in responding to unanticipated needs. 4. Incremental budgeting (begin with current year’s performance and adjust for expected changes.) Adv: Review focuses on incremental
Words: 353 - Pages: 2
public resources. Despite the good sense it makes to “budget to a plan”, public expenditures are frequently approved based on who supports what, rather than on a clear understanding of what exactly the expenditures will accomplish. Public Budgeting is not about numbers; it is about making Democratic governance work. During the debates leading to the creation of the American Constitution, taxation and public expenditures were one of the driving forces leading to the creation of our peculiar
Words: 9430 - Pages: 38
be balanced against the need to ensure that there are adequate resources (including from external sources) to guarantee the delivery and development of essential services especially in the social sectors. The three objectives of budgeting The first objective of budgeting is affordability. A budget must be affordable; parliament must ensure that the total amount of spending affordable and it must control expenditure. The second objective is prioritization; setting priorities and allocating adequate
Words: 1927 - Pages: 8
