Discuss why important to identify for estimation errors

Assignment Help Accounting Basics
Reference no: EM13844443

A consultant commented that "too often the numbers look good but feel bad". This comment often stems from an estimation error common to capital budgeting proposals that relate to future cash flows. Three reasons for this error often exist. First, reliability in predicting cash flows several years into the future is very difficult. Second, the present value of cash flows many years into the future (say, beyond 10 years) is often very small. Third, it is difficult for personal biases and expectations not to unduly influence present value computations.

Discuss why these three areas are important to identify for estimation errors when you are considering an investment project.

Reference no: EM13844443

Questions Cloud

Example of an effective enforcement of security policies : This case study is an example of an effective enforcement of security policies. Although there was an original violation of policy by the physician assistant, the breach was quickly stopped by a coworker
How critical thinking can be used in everyday life : Write a 350-word paper about how critical thinking can be used in everyday life. Include the following in your paper: Identify three lessons that you learned from this course. Describe each of them and explain why they are meaningful to you
Identify deficiencies in queensland health payroll system : Identify 5 deficiencies in the Queensland Health Payroll System project, and provide recommendations on how these deficiencies may be overcome in future projects.
Define the kernel mode in operating system : Define the kernel mode in operating system
Discuss why important to identify for estimation errors : Discuss why these three areas are important to identify for estimation errors when you are considering an investment project.
Primary functions of a financial forensics professional : What are the two primary functions of a financial forensics professional. What is one reason for the proliferation of white collar crime
Compare the master budget flexible budget and actual results : Compare the master budget, flexible budget, and actual results for the month of July. Briefly discuss which division appears most successful and why.
Explain the conversion from class to basic type : Conversion from Class to Basic Type
Write a program to open a file in c++ : Write a program to open a file in C++

Reviews

Write a Review

Accounting Basics Questions & Answers

  One of the operations in the united states postal service

one of the operations in the united states postal service is a mechanical mail sorting operation. in this operation

  How to journalize transaction

How to journalize transaction. Omit the transaction analysis, and record the journal entry as a debit to Dividends Declared and a credit to Cash.

  Dhc companys cost of 642 for its product a is 24 lower than

1. carter companys selling price of 595 for its product a is 26 higher than its current cost. what is the

  Preparing accurate and truthful financial statements

Who would you say benefits more when a company prepares accurate and truthful financial statements?

  Calculate cholatis branch profits tax and estimate its

cholati is a foreign corporation that produces fi ne chocolates for sale worldwide. cholati markets it chocolates in

  Checking account balance 937850 certificate of deposit

for each individual situation determine the amount that should be reported as cash. 1. checking account balance 937850

  Ivy industrial packing co purchased a packing machine for

ivy industrial packing co purchased a packing machine for 950000 at the beginning of 2009. the robot has an estimated

  Manager cant quote more than 70 per timing cant pay more

manager cant quote more than 70 per timing cant pay more than 9 per unit normal price 12.50 total purchased price 30.00

  A company has a minimum required rate of return of 8 it is

a company has a minimum required rate of return of 8. it is considering investing in a project that costs 91116 and is

  Kyle worked as a free-lance software engineer for the first

kyle worked as a free-lance software engineer for the first three months of 2013. during that time he earned 78000 of

  For mize company units to be produced are 5580 in quarter 1

for mize company units to be produced are 5580 in quarter 1 and 6430 in quarter 2. it takes 1.5 hours to make a

  Wilson co purchased land as a factory site for 800000

wilson co. purchased land as a factory site for 800000. wilson paid 80000 to tear down two buildings on the land.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd