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

  What are the possible benefits to the company of having a

what are the possible benefits to the company of having a share election scheme? the solvency test must be satisfied by

  One particular client the lason family requested 46 jobs

andracki housecleaning provides housecleaning services to its clients. the company uses an activity-based costing

  Compare and contrast the two methodologies

Business process reengineering (BPR) can be an effective tool to aid in achieving breakthroughs in quality improvement and cost management.

  Find a journal article online about standard costing in the

find a journal article online about standard costing. in the subject line of your post include the title of the article

  What journal entry should be recorded g at the beginning of

1in 2013 company a sold inventory costing 100 to its fully-owned subsidiary company b for 150. the entire inventory

  Bad debts analysis-allowance account

On January 1, 2010, the balance in Kubera co.'s Allowance for Bad Debts account was$9720. during the year, a total of $23900 of delinquent account receivable was written off as bad debts, the balance in the allowance for bad debts account at Decem..

  Calculate the book value of machinery for the year ended

Calculate the book value of machinery for the year ended June 30, 2004. Calculate the depreciation expense of machinery for the year ended June 30, 2005.

  The common stock account

The common stock account represents 500,000 shares of no par value common stock issued and outstanding. The corporation has 1,000,000 shares authorized. Net income for the year totaled $100,000

  Inventory is an asset before it is used and does not have a

inventory is an asset before it is used and does not have a directimpact to income. what if a company has a high level

  Prepare a comparative condensed income statement

Prepare a comparative condensed income statement for 2001 under FIFO and LIFO. Which cost flow method (FIFO or LIFO) produces the most meaningful inventory for the balance sheet? Why? Which cost flow method produces the most meaningful net income? Wh..

  What is the amount of equity

Pam's Candy Co. has assets of $49,200 and liabilities of $28,200. What is the amount of equity? What is the amount of net assets?

  You have been assigned the task of testing the accuracy of

you have been assigned the task of testing the accuracy of the final inventory compilation for mt. hood furniture. you

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