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cash outflows only
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Similarities between firm's capital budgeting decisions and individual investment decision?
Capital budgeting is very necessary for a proper management. The manager is the one to select the best form and type of investment. And to do this a sound procedure well planing and evaluation is needed. This process is known as capital budgeting. Or in some simple words capital budgeting is the process of recording additions to the assets.Capital budgeting process is very much same as those of individual investment decisions as they both involve these same steps:-They calculate the risk involved in the cash flows.They also in favor find the rate of returnEstimation of the cash flow that is, the rate of interests and dividends as involved in the case of shares, debentures or bonds and proper optimization of cash flow is common in both of the sides.They both consider if the Present value of the inflows is greater than the present value of the outflows which means that net present value should be positive.Calculated rate of return is also to be considered that if it is higher than the total project cost of the capital.Determination of appropriate discount rate which is based on the level of the risk in the project and the interest rate is also common in both case.Several Capital budgeting techniques are also very much similar to those of the individual investment decisions as shown in the above points. Capital budgeting decisions and individual investment decisions are same in many ways and their way of interpretation is somewhat identical as shown above.
How does capital budgeting affect shareholders wealth?
since it is a long run investment, the ability of the firm to involve in effective planning affect the wealth of the shareholders
Can Present value be added to determine the value of capital budgeting project?
As capital budgeting involve decision making which is for long term time period that's why time value of money imprecations are included while calculating capital budget and that's why present value of actual cash flows are used rather the real value of cash flows.
What is Capital budgeting is primary concerned with?
Management of fixed capital, capital budgeting decision or investment decision is the process of long range planning involving investment of funds in various long term activities whose benefit are expected over a series of year .Need of Capital budgeting Decisionthese decisions affects the long term growth & survival of business,these decision have long term implication for the enterprises because the effect of investment decision extend in to the futurethese decision involve large investment in various long term asset , thus planned after careful evaluation of various projectinvolve risk & uncertainty associated with the future cash flow of the project,since the actual cash flow may not match expected cash flow the rate of earning may fluctuate & he firm may become more riskydecision once taken cannot be easily reversible without incurring heavy losses , these decisions are very important for any organizationSteps in capital Budgeting :project planningproject evaluationproject selectionproject implementationproject controlproject reviewCapital Budgeting Techniques for Analysis of projects :A . Discounting technique (use time value of money ) Methods :Net present valueprofitability indexInternal Rate of returnModified internal rate of returnDiscounted payback periodNet present value indexB . Non- Discounting Technique (ignores time value of money ) Methods :Payback periodAccounting rate of return or average rate of return
Discuss the requirements in establishing a dress shop?
The requirements for opening a dress shop involve making decisions. You need to decide if you have enough capital and if you really want that type of business.
Why do decisions involve trade-offs?
because averyone has to make sacrifices
Why do decisions involve a trade off?
because averyone has to make sacrifices
Which type of decisions require the use of critical evaluation skills?
Decisions that involve complex problems, high stakes, uncertainty, and multiple perspectives require the use of critical evaluation skills. These decisions often necessitate careful analysis, logical reasoning, gathering evidence, and considering various factors before reaching a conclusion.
What does the training involve in accounting?
book keeping, costing, budgeting, auditing, financial reporting and corporate/mercantile law application. Further detail in related link provided.
Are employees involved in policy decisions?
A poll of Fortune 500 companies reported that almost half (47 percent) of these companies involve employees in policy decisions
Which of these terms describes the decisions and strategies the US makes that involve other nations?
foreign policy
Economics decisions involve doing what with resources to produce goods and services for people to consume?
Allocating
