Pros and Cons of Capital Budgeting Measures - Research Paper Example

Only on StudentShare

Extract of sample
Pros and Cons of Capital Budgeting Measures

Examples here include the payback period and the accounting rate of return. The other techniques employed in the evaluation of projects are the discounted methods of appraising capital projects. In these methods, the future expected cash flows are discounted at the organizations cost of capital to determine the projects’ to be undertaken. In this approach, only projects with positive net present value will be undertaken in order of their profitability. The idea of capital budgeting before investments are undertaken is necessitated by the need to avoid incurring losses and to maximize the returns of a firm at the lowest cost possible. The budgeting process is also necessary because of the capital constraints that companies face. Due to capital inadequacy, companies and firms will not be in a position to undertake all the projects and therefore creating the need to only undertakes the most profitable investments (Baker, 2011). Failure to undertake capital budgeting process may cause organizations to realize heavy losses and have going concern problems. In this paper, discussion has made on the pros and cons of the methods of NPV, IRR, MIRR and discounted payback method. I would prefer the use of NPV and IRR methods of capital budgeting in instances that we have independent projects with equal sizes. ...Show more

Summary

PROS AND CONS OF CAPITAL BUDGETING MEASURES Date Executive Summary Organizations have to do investment appraisal before undertaking long-term projects in order to determine the feasibility and profitability of their investments…
Author : rosenbaummaggie
Save Your Time for More Important Things
Let us write or edit the research paper on your topic
"Pros and Cons of Capital Budgeting Measures"
with a personal 20% discount.
Grab the best paper

Related Essays

William Hill Plc acquired 624 betting shops of Stanley Leisure an Evaluation
The outline of this article is framed in such a manner that the first section describes the theory of investment decisions for the acquisitions. This research highlights the motivation of top management of William Hill Plc behind this acquisition deal. Subsequent section emphasizes the impact of this acquisition on the capital structure of William Hill Plc.
10 pages (2500 words) Coursework
Placement Report at Abacus Business Advisors, Ltd.

The report would be presented by initially providing a brief company overview and background of Abacus Business Advisors, Ltd. Subsequent sections would discuss the placement job details, the learning experience and the skills section, prior to providing the concluding remarks. Abacus is a chartered accountancy firm located in Leeds.

11 pages (2750 words) Essay
Capital Budgeting. Payback Period. NPV.
These decisions have a direct impact in the future profitability of the firm. These decisions cam also change the risk profile of the firm. For example, the firm may decide to invest the funds in an unrelated industry. As a result of this the firm will be able to diversify its risk.
4 pages (1000 words) Essay
Capital Budgeting
Topic: Capital Budgeting Name: Course: Instructor’s Name: Date: In recent past, capital budgeting has gained popularity as of the main functions of management. Capital budgeting refers the selections of the projects that will yield higher the returns of the company.
2 pages (500 words) Essay
Capital Budgeting Analysis
The company, in 2003, has shown a strong growth in the quality of the net income over the three years showing a 31 percent as compared to 2001. Likewise, the return on total assets has improved over the three years. The company provides 15.9 cents for every $1 invested in the assets of the company as compared to 13.7 cents in 2001.
4 pages (1000 words) Research Paper
McKenzie Corporations Capital Budgeting
8 pages (2000 words) Assignment
Capital Budgeting PROJECT ANALYSIS
Students will assist in carrying out some of the production activities during the academic year. To ensure smooth running the Outdoor Recreation program and the Center for Entrepreneurship will be involved in direct supervision for running of the project.
4 pages (1000 words) Essay
Valuation Methods of Collateralized mortgage obligations
30 Findings from Review of Literatures in a Broad Approach 33 Background and Recent Trends 33 Practices and Key Issues in CMO Processing 34 The Transformation of the US Banking and Mortgage Markets 37 Securitization and the Mortgage Market 37 The Evolution of Financial Exploitation 38 Balanced Discussions and Alternative Viewpoints 41 Identified Research Gaps 42 Conclusion of Review 44 Summary 46 Chapter 3: Research Methods and Design 50 Introduction 50 Research Method and Design Appropriateness 50 Appropriation of Research Design with the Study Concerned 52 Population, Sampling and Data Collection Procedures and Rationale 53 Appropriateness, Reliability and Validity of the Instruments Selec
30 pages (7500 words) Dissertation
Corporate Finance: Traditional Capital Budgeting
Corporate Finance: Traditional Capital Budgeting Introduction Capital Budgeting is the process of planning of long term corporate project related to the investment decision of the organization. The main objective of Capital Budgeting is to allocate firm’s limited resources between competing opportunities (Harrison & John 2010).
6 pages (1500 words) Essay
Pharmaceutical Industry in United States
Contents Executive Summary 2 Introduction to the Pharmaceutical Industry in United States 3 Introduction to retail business in America 4 Ratio analysis 6 Profitability Ratios 7 Efficiency and Liquidity ratios 9 Gearing Ratios 11 Comparison with competitor 11 Executive Summary Johnson & Johnson and its subsidiaries (the Company) have approximately 127,600 employees worldwide engaged in the research and development, manufacture and sale of a broad range of products in the health care field.
6 pages (1500 words) Assignment
Find out how much would it cost
to get a custom paper written by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT