• Capital budgeting
    firm’s future. The difference between capital budgeting and individual’s investment decisions are in the estimation of cash flows, risk, and determination of the appropriate discount. B - The difference between interdependent and mutually exclusive projects is that the independent project’s cash flows...
    Premium 998 Words 4 Pages
  • Decision Making Process
    single undertaking or project being considered as an investment possibility. There are two kinds of proposals: Independent proposals: Even though few proposals in a firm are truly independent, for practical purposes it is common to assume that certain proposals are independent. Usually, if proposals...
    Premium 983 Words 4 Pages
  • Capital Budgeting
    handed you the estimated cash flows for two proposed projects. Project L involves adding a new item to the firm’s ignition system line; it would take some time to build up the market for this product, so the cash inflows would increase over time. Project S involves an add-on to an existing line, and its...
    Premium 751 Words 4 Pages
  • Accounting and Finance 7
    *capital budgeting? “Simply put, capital budgeting is the whole process of analyzing projects and deciding which ones to include in the capital budget” (Page 344). The five key methods used to evaluate projects for capital budgeting include: (1) payback period, (2) discounted payback period, (3) net...
    Premium 3683 Words 15 Pages
  • Capital Budgeting
    Question a What is capital budgeting? Are there any similarities between a firm’s capital budgeting decisions and an individual’s investment decisions? Capital budgeting is the process of analyzing potential additions to fixed assets. Capital budgeting is very important to firm’s future because of...
    Premium 1749 Words 7 Pages
  • Capital Budgeting
    Capital Budgeting   What are the characteristics of mutually exclusive capital budgeting projects that may cause the net present value and internal rate of return methods to rank the projects differently? How would this difference impact your recommendations and/or decision-making process within your...
    Premium 1416 Words 6 Pages
  • Capital Budgeting
    NPV > 0 and/or IRR > WACC. 10-3 What is the difference between independent and mutually exclusive projects?   Independent projects – if the cash flows of one are unaffected by the acceptance of the other. Mutually exclusive projects – if the cash flows of one can be adversely impacted...
    Premium 1428 Words 6 Pages
  • Mr.
    Budgeting 1. What is the difference between independent and mutually exclusive projects? An independent project is one in which accepting or rejecting one project does not affect the acceptance or rejection of other projects under consideration. Therefore, no relationship exists between the cash flows of...
    Premium 2251 Words 10 Pages
  • Unit 8 Reading
    5 or 6 years, then positive cash flows for the following 20 years. Given their forecasted cash flows, both managements decided that taking on the projects would increase their company’s intrinsic value. Because the planes will compete with one another, either Boeing’s or Airbus’s forecast is probably...
    Premium 14992 Words 60 Pages
  • npv and irr
    determine whether to accept a project or not.Net Present Value (NPV)Net present value is the difference between the present value of cash inflows and the present value of cash outflows. It is used in capital budgeting to analyze the profitability of an investment or project. NPV= sum[CFt/(1+r)t]-C0  ...
    Premium 540 Words 3 Pages
  • Chicago Valve
    investments of mutually exclusive projects. 7 If all projects are mutually exclusive If NPV is positive, the project should be accepted. The projects have to be mutually exclusive to accept NPV. earlier, if the NPV is negative, the projected cash flows will not cover costs and thus, the project should be...
    Premium 710 Words 3 Pages
  • Fiance Mini-Case
    B) Answer: Projects are independent if the cash flows of one are not affected by the acceptance of the other. On the other hand, two projects are mutually exclusive if acceptance of one impacts adversely the cash flows of the other; that is, at most one of two or more such projects may be accepted...
    Premium 1812 Words 8 Pages
  • Finance Mini Case Chp11
    budgeting is the decision process that managers use to identify those projects that add value to the firm’s value, and as such it is perhaps the most important task faced by financial managers and their staff. The process of evaluating projects is critical for a firm’s success. Capital budgeting is •...
    Premium 2704 Words 11 Pages
  • Financial Management (Capital Budgeting Mini Case)
    be able to decide whether an investment is worth undertaking and be able to choose intelligently between two or more alternatives. To do this, a sound procedure to evaluate, compare, and select projects is needed. This procedure is called capital budgeting. In other words, capital budgeting is the...
    Premium 4479 Words 18 Pages
  • Rhrhyr
    important, and state how project proposals are generally classified. • List the steps involved in evaluating a capital budgeting project. • Calculate payback period, discounted payback period, Net Present Value (NPV), and Internal Rate of Return (IRR) for a given project and evaluate each method...
    Premium 9089 Words 37 Pages
  • Answer Key to Finance Book by Houston and Brigham | Chapter 10 | 10th Edition
    ANSWERS TO END-OF-CHAPTER QUESTIONS CHAPTER 10 10-1 Project classification schemes can be used to indicate how much analysis is required to evaluate a given project, the level of the executive who must approve the project, and the cost of capital that should be used to calculate the project’s NPV...
    Premium 8818 Words 36 Pages
  • Wacc
    from investors, so they are not included in the calculation of the cost of capital. We adjust for these items when calculating the cash flows of a project, but not when calculating the cost of capital. WACC Estimates for Some Large U. S. Corporations Company WACC Intel (INTC) 16.0 Dell Computer (DELL)...
    Premium 1960 Words 8 Pages
  • Project Appraisal Techniques
    Project appraisal techniques are used to evaluate possible investment opportunities and to determine which of these opportunities will generate the best return to the firm’s shareholders. Therefore, it is vital for the firm if they wish to continue receiving funds from shareholders to employ the best...
    Premium 2564 Words 11 Pages
  • Capital Budgeting
    Corporate Finance Capital Budgeting Course Outline CAPITAL BUDGETING Course outline Key Principles in Capital Budgeting: Criteria for Investment Projects Net Pesent Value Internal Rate of Return Payback Profitability Index Finding Cash Flows Maria Ruiz 1 Financial Management Financial...
    Premium 1999 Words 8 Pages
  • Chapter Five Npv
    Profitability Index (PI) method. For each method, we learn what it measures, its computation, and how we use it to make decisions on independent and mutually exclusive projects. We also develop four criteria, which are based on the factors that determine value, to evaluate each capital budgeting method in...
    Premium 4729 Words 19 Pages