Capital Budget Recommendation

Topics: Investment, Net present value, Rate of return Pages: 4 (1141 words) Published: October 10, 2010
Capital Budget Recommendation
Managerial Accounting and Legal Aspect of Business/ACC 543
May 24, 2010

Capital Budget Recommendation
Guillermo Navallez is the owner of Guillermo Furniture, a company that manufactures midgrade and high-end sofas. Recent changes in the business environment and economy have prompted Guillermo act fast before he is forced out of business. After doing some research, Guillermo identified some possible investment options that would improve his businesses' financial condition. A capital budget evaluation will help to determine which capital investment decisions will provide the greatest returns. Choosing the right techniques could is very important to the success of the project and organization. An overview of each possible technique provide it this paper before explaining how the how the recommendation was made.

After considering Guillermo's circumstance, evaluating Guillermo Furniture's data sheet and using the present value index method to compare his alternative capital investment opportunities, a recommendation was ready to be made to Guillermo. It is recommended that Guillermo select the high technology investment solution because of its higher return rate.

Capital Budget Evaluation Techniques and the Recommended course of action
Capital Budget Evaluation Techniques
Capital investment decisions could be very complex. Several capital budget techniques available to use and numerous factors to keep in mind. For example, the time value of money may be an important factor to consider when using some of the techniques to evaluate a course of action. The payback method and unadjusted...

References: Edmonds, T. P., Edmonds, C. D., Olds, P. R., McNair, F. M., Tsay, B., Schneider, N. W., Milam, E. E., (2007). Fundamental financial & managerial accounting concepts. New York: McGraw-Hill.
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