Why is the capital budgeting decision crucial

Assignment Help Accounting Basics
Reference no: EM132730627

Questions -

a) Why is the capital budgeting decision crucial and important for a firm? State why the capital budgeting errors are so costly?

b) The JLK Corporation is considering an investment that will cost RM80,000 and have a useful life of 4 years. During the first 2 years, the net incremental after-tax cash flows are RM25,000 per year and for the last two years they are RM20,000 per year. Calculate the payback period for this investment.

c) Calculate the following project, at cost of capital of 10%.

Years

Cash flow (RM)

0

-10,000

1

2,000

2

2,000

3

4,000

4

4,000

5

5,000

i) NPV

ii) PI

iii) Justified should we accept or reject the project?

Reference no: EM132730627

Questions Cloud

Find the management accountant responsibilities lie in area : In the capital investment decision process, the management accountant's responsibilities lie in the area of? methods of computation and final screening.
What amount of depreciation will hanley record : Estimates the machine will last 10 years and have a residual value of $5,000. What amount of depreciation will Hanley record in 19X5?
What are classical kinds of resources : What is a resource and what are the classical kinds of resources? How are resources measured? Why is it not possible to summarize resources
Record the transactions of south carleton cement company : Record the transactions of South Carleton Cement Company (SCCC) that occurred during 2021.May 31 SCCC's only employee earned gross pay of $4,800.
Why is the capital budgeting decision crucial : Why is the capital budgeting decision crucial and important for a firm? State why the capital budgeting errors are so costly
Describe the competitive escalation paradigm : Describe the competitive escalation paradigm and how it can be detrimental to financial decisions.
Record transaction in the street improvement debt service : Record this transaction in both the Street Improvement Debt Service Fund and the governmental activities general journals. For the entry
Mission statement components : Analyze the mission statement of the following organizations using the underlisted 9 mission statement components.
Calculate the overhead allocated for item a : ABC Co. estimates that for the year 2019-20, its overhead cost will be Rs. 10,00,000. Calculate the overhead allocated for Item A

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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