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

  On january 1 2011 charlie corporation acquired all of the

on january 1 2011 charlie corporation acquired all of the net assets of rocky corporation for 2000000. the following

  Income recognition on long-term contracts

Cornwell Construction Company has been operating in Pennsylvania for a number of years. During 2011, the firm contracted with the Borough of Lewisburg to build a domed sports complex.

  Reporting the bond liability

On December 31 year 1 Todd Corporation issued 500 of its 10% $1,000 bonds at 105. Todd Corporation uses IFRS. The bonds were issued through an underwriter to whom Todd paid bond issue costs of $15,000. On December 31 Year 1 balance sheet Todd shou..

  Robert and sylvia propose to have their corporation

robert and sylvia propose to have their corporation wolverine universal wu acquire another corporation emu inc. in a

  Describe the it control procedures that should exist in

a. identify two major control weaknesses in the family support centers cash receipts procedures. for each weakness you

  Net income for the year was 83 cash dividends were 16 the

net income for the year was 83. cash dividends were 16. the company did not dispose of any property plant and

  The treasury stock purchased in the above question was

the treasury stock purchased in the above question was resold by chen inc. for 15000. what effect does this transaction

  What are the four things that must be done to remove the

what are the four things that must be done to remove the bonds from the books in an early retirement?no words

  Paul has the following long-term capital gains and losses

paul has the following long-term capital gains and losses for 2013 62000 capital gain on collectibles 21000 capital

  Travel expenses marilyn a business executive who lives and

travel expenses. marilyn a business executive who lives and works in cleveland accepts a temporary out-of-town

  Determine overhead cost per unit-activity-based costing

Using the activity-based costing approach, determine the overhead cost per unit for each product.

  Were the analysis prepared by cincinnati flow technologys

cincinnati flow technology cft has purchased 10000 pumps annually from kobec inc. because the price keeps increasing

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