Capital Budgeting: Decision Criteria Brigham and Daves Ch. 12 Christopher B. Alt CFA PhD What Is Capital Budgeting? Analysis of potential additions to fixed assets Long-term decisions typically involving large $ expenditures Making the ‘right’ capital budgeting decisions is enormously important to a firm’s future Should we build this plant? All rights reserved - Christopher B. Alt 2 Key Steps in Capital Budgeting Estimate CFs (inflows & outflows) Assess riskiness of CFs Determine
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| | Case #4 - Conch Republic Electronics | | | | | | | | | | | | | | | | Input Area: | | | | | | | | | | | | | | | | | | | | | | | | | | | Equipment | $15‚000‚000 | | | | | | | | Salvage value | $3‚000‚000 | | | | | | | | R&D | $750‚000 | sunk cost | | | | | | | Marketing study | $200‚000 | sunk cost | | | | | | | | | | | | | | | | | Year 1 | Year 2 | Year
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1 Lecturer: Dr Lawrence Question: Conch Republic Electronics‚ Part 1 Conch Republic Electronics is a midsized electronics manufacturer located in Key West‚ Florida. The company president is Shelley Couts‚ who inherited the company. When it was founded over 70 years ago‚ the company originally repaired radios and other household appliances. Over the years‚ the company expanded into manufacturing and is now a reputable manufacturer of various electronic items. Jay McCanless‚ a recent MBA graduate
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Capital budgeting (or investment appraisal) is the planning process used to determine whether an organization ’s long term investments such as new machinery‚ replacement machinery‚ new plants‚ new products‚ and research development projects are worth pursuing. It is budget for major capital‚ or investment‚ expenditures.[1] Many formal methods are used in capital budgeting‚ including the techniques such as * Accounting rate of return * Payback period * Net present value * Profitability
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Conch Republic Electronics Conch Republic Electronics BUS350 Principles of Finance Dr. Lance Gilbert November 30‚ 2014 Conch Republic Electronics With the company being midsized in the electronics manufacturing there is an increasing pressure to remain highly marketable and keep up with the product releases that are profitable within the public’s technological desires. Having expanded their own base product from repair to the addition of product manufacturing‚ Conch Republic Electronics is aware
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Conch Republic Electronics is a midsized electronics manufacturer located in Key West‚ Florida. The company president is Shelley Couts‚ who inherited the company. When it was founded over 70 years ago‚ the company originally repaired radios and other household appliances. Over the years‚ the company expanded into manufacturing and is now a reputable manufacturer of various electronic items‚ Jay McCanless‚ a recent MBA graduate‚ has been hired by the company’s finance department. One of the major
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CAPITAL BUDGETING DECISION Clark Paints To look into possible ways to trim total poduction costs. Make or purchase paint cans? Cost of new equipment Disposal value Life production - number of cans Annual production or purchase needs - number of cans Project life $ $ 200‚000 40‚000 5‚500‚000 1‚100‚000 5 years Number of workers needed Annual work-hours per employee Earnings per hour for employees Other annual benefits per employee - % of wages Annual health benefits per
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needed): Selling price per unit 247.5 VC per unit 97 Fixed cost per year 4200000 Discount rate 19% Tax rate 35% Number of years for the project 5 Model Area (expand as needed): Initial Investments Equipment Purchase 20500000 Working Capital 3000000 Total Investment 23500000 Salvage value 3500000 Annual Net After Tax Cash Flows year 0 year 1 year 2 year 3 year 4 year 5 Initial Investment -23500000 Estimated Sales volume 68000 79000 105000 73000 50000 Sales 16830000 19552500
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CAPITAL BUDGETING – INVESTMENT DECISIONS SUBMITTED BY : Abhisht Sinha (08305) Himangi Malik (08321) Swagata Ghoshal (08337) Tijeel Kumar Tarun (08352 I. CASE ABOUT BUILT OPERATE AND TRANSFER The case taken is about Built Operate and Transfer. It is a feasibility report which was prepared to present economic analysis carried out on the project and contain result of economic evaluation of the project so that the owner can take investment decision and the project can be properly planned and
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To: Beth Davies-Lowry‚ President of Intercoastal Electronics Company From: Student Date: February 20‚ 2011 Re: Budgeting Impacting Company’s Financial Statements Scope and Objective Intercoastal Electronics Company is excited about the upcoming year‚ and is ready to acquire new inventory equipment in order to process a streamline operation for their small‚ rapidly growing consumer electronics products base. The acquisition of new assets within
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