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Why cannot the accounting rate of return be used as a reliable capital budgeting technique?
Wiki User
∙ 14y ago
Because this computation attempts to calculate the average book value of an investment by simply averaging the initial and liquidation values.
Wiki User
∙ 14y ago
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When a firm chooses to buy a new fixed assets it is making a decision?
capital budgeting
What are the limitations of capital budgeting process?
Capital budgeting limitations are as follows:-It has long term implementations which can't be used in short term & it is used as operations of the business. A wrong decision in the early stages can affect the long term survival of the company. The operating cost gets increased when the investment of fixed assets is more than required.Inadequate investment makes it difficult for the company to increase its budget & the capital.Capital budgeting involves large number of funds so the decision has to be taken carefully.Decisions in capital budgeting are not modifiable as it is hard to locate the market for capital goods.The estimation can be in respect of cash outflow and the revenues or saving & costs attached which are with projects.
Determine factors that will influence to choice between labor intensive and capital intensive technique?
Size of the business
What are examples of intellectual capital in the form of structural intangible assets?
examples of these systems are the information system, accounting system, purchasing system, and sales system
Which is more important accounting break-even point or financial break-even point?
The financial breakeven point is a more relevant measure than the accounting breakeven point because the accounting breakeven point does not consider the initial investment in the project. With any investment, one has the option to venture into it, or to take a less risky route and invest (in a bond or a stock that would give them a more guaranteed return). Thus an accounting breakeven, considers all cost, except the opportunity cost of the capital invested in project, and this is something that the financial breakeven considers. Financial breakeven point is the point where NPV is greater than or equal to zero: the point where there is economic value added® (a term trademarked by Stem-Stewart). This is because in calculating the financial breakeven, the formula includes the opportunity cost of capital: the initial investment divided by the timeannuity factor at the discount rate (where the discount rate is the opportunity cost of capital).
Objectives of capital budgeting?
what are the objective of capital budgeting
What is the objective of capital budgeting?
objectives of capital budgeting
Which capital budgeting method uses accrual accounting rather than net cash flowsl as a basis for calculations?
apr
Modern view of capital budgeting?
Meaning of Capital Budgeting
What are objectives of capital budgeting?
1) What is capital budgeting? What are its objectives?
Which capital budgeting technique is consistent with maximizing shareholder wealth and why?
NPV analysis is what they teach in MBA programs and what CFOs everywhere use.
What is the purpose of capital budgeting?
The purpose of capital budgeting is to help poor people and others improve their life.
What impact does WACC have on capital budgeting and structure?
What impact does WACC have on capital budgeting and structure?
Capital budgeting literature review?
capital budgeting is one of important in company financeing position
Various objectives of capital budgeting in project planning?
Objectives of capital budgeting project report
Where can one learn about the capital budgeting process?
You can learn about the capital budgeting process on the wikipedia free encyclopedia article which is labelled capital budgeting. It describes what the process is and what types of companies use it.
Why capital budgeting decision very crucial for finance managers?
why capital budgeting decisions are very crucial
