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What decision criteria should managers use in selecting projects when there is not enough capital to invest in all available positive NPV projects?
Profitability index criteria can be used to select projects when a capital rationing situation exists, with the highest profititibility index from specified projects being the goal.
Why should the cost of capital used in capital budgeting?
The cost of capital is crucial in capital budgeting because it serves as a benchmark for evaluating investment projects. It represents the minimum return that investors expect for providing capital, reflecting the risk associated with the investment. Using the cost of capital helps ensure that projects generate returns that exceed this threshold, thereby maximizing shareholder value and ensuring efficient allocation of resources. Ultimately, it aids in making informed decisions about which projects to pursue or reject.
Different stages of capital budgeting?
According to Cost Accounting - A Managerial Emphasis, Fourth Canadian Edition (Horngren et al): 1: Identification - Identify which types of capital expenditure projects are necessary to achieve the organization's goals, objectives, and strategies. 2: Search - Explore several different capital expenditure investment alternatives that have the capacity to achieve the organizational objectives and strategies. 3: Information-acquisition - Analyze the predicted costs and consequences of the alternative capital investments. Information should be both qualitative and quantitative. 4: Selection - Choose projects for implementation. If there are several suitable projects, this could require ranking projects in terms of priorities. A single project hurdle rate is chosen and used to discount the costs and benefits of the various projects, thereby allowing management to compare the projects. 5: Financing - Obtain project finances. Determine whether internal financing (cash flow from operations) or external financing (debt or equity) is necessary. In large organizations, this is the responsibility of the treasury department. 6: Implementation and control - Initiate selected projects and monitor performance. This should include making sure the project is on time and within budget, and should be followed up by a post-investment audit.
Where on the 1040 form should capital gain distributions be reported?
Capital gain distributions should be reported on line 13 of the 1040 form.
What version of TurboTax should I use to accurately report capital gains?
For accurate reporting of capital gains, you should use TurboTax Premier or TurboTax Self-Employed versions.
How can you start corporation and how much capital you need to start a corporation?
it will depend on the capital you have but should be some thing big
Do you believe that a firm should use the same cost of capital for all of its projects?
no
What decision criteria should managers use in selecting projects when there is not enough capital to invest in all available positive NPV projects?
Profitability index criteria can be used to select projects when a capital rationing situation exists, with the highest profititibility index from specified projects being the goal.
What is a balance diet ration?
A balanced diet ration is the ration of the various components that you have in your diet. For proteins and carbohydrates the ratio should be one to two so for every one protein, there are two carbohydrates.
How should the capital assets of a capital lease be recorded in the capital projects fund?
Well, darling, the capital assets acquired through a capital lease should be recorded as both an expenditure and an other financing source in the capital projects fund. The amount recorded as an expenditure should be equal to the present value of the lease payments, and the same amount should be recorded as an other financing source to reflect the lease obligation. Just make sure to dot your i's and cross your t's, honey.
Suppose a firm estimates its cost of capital for the coming year to be 10 What are the reasonable cost of capital for an average risk project high risk and low risk?
In order to determine reasonable costs of capital for average, high and low risk projects the firm should develop risk-adjusted costs of capital for each category of risk based on the concept of divisional WACC. If a firm estimates that its cost of capital for the coming year will be 10%, the firm should use 10% as the basis for its average risk projects since the firm will need to achieve a minimum of a 10% return on all its projects. Typically, a high-risk project has the potential for higher returns and a low-risk project will typically yield lower returns. Therefore, the firm could set the cost of capital for its high-risk projects at 12% and the cost of capital for low risk projects at 8%. Since the average risk project has a 10% cost of capital, the overall risk of the firms projects will be equal to the 10% cost of capital. Similarly, if the firm's high-risk projects are particularly risky, they could be set at a 15% cost of capital and the low-risk projects will be adjusted down to a 5% cost of capital. The ultimate goal is that the portfolio of the firm's projects will achieve the required 10% return or greater so that the cost of capital to fund the projects is covered. The assignment of risk is somewhat subjective but it is better than not adjusting the risk at all.
Who decides how profits should be spent in a corporation?
Ultimately, the Board of Directors decides how profits should be spent in a corporation.
Water found in the ogallala aquifer is made of the elements hydrogen an oxygen in a ration of 18 according to the law of definite proportions what should the ration of hydrogen to oxygen be for wate?
58
Should an economic test be applied in judge the activities of a corporation?
should an economic test be applied in judging the activities of a corporation
What is the motto of Resurfice Corporation?
Resurfice Corporation's motto is 'What Every Ice Resurfacer Should Be'.
Should you use dba name as the company name or the corporation name as the company name?
The corporation name should be used as the company name.
How do you capitalize completed projects?
Completed projects can be capitalized by highlighting their names or titles. This can be done by using capital letters for the first letter of each word in the project name or by using all capital letters for the entire project name.
