Process of allocating scarce capital

Assignment Help Finance Basics
Reference no: EM133062468

The process of allocating or budgeting capital is usually more involved than just deciding whether to buy a particular fixed asset to create additional value. In fact, we frequently face broader issues like whether we should launch a new product or enter a new market. Decisions such as these determine the nature of a firm's operations and products for years to come, primarily because fixed assets are long-lived and not easily reversed once they are made, the process of allocating scarce capital in long-lived assets must be carefully evaluated. Briefly discuss the following four methods to decide on capital budgeting decisions:

- net present value (NPV)

- profitability Index (PI)

- Internal Rate of Return (IRR)

- Pay Back Period (PBP)

Reference no: EM133062468

Questions Cloud

List and explain matters that the auditor should consider : List and explain matters that the auditor should consider when designing substantive analytical procedures
What is the current market price of the bonds : What is the current market price (intrinsic value) of the bonds? Round the answer to two decimal places.
Practice and structure of the board of directors : Discuss how effective the practice and structure of the board of directors of Nestle PLC is , in the performance of socially responsible Investment(SRI) stocks.
Determine amortization period for intangible asset : MXM Animation Bhd is one of the largest film production and distribution companies in Malaysia. Determine amortization period for intangible asset
Process of allocating scarce capital : The process of allocating or budgeting capital is usually more involved than just deciding whether to buy a particular fixed asset to create additional value.
Discuss the effect on the assessable income of the parent : Discuss the effect on the assessable income of the parent - Which amounts, if any, are assessable income
Calculate the proposed discount : Calculate whether the proposed discount will result in a net saving or cost for DT plc
Describe the greater economic value : You work for a development firm and have a residential building lot for sale. You have received two purchase offers. Offer A is offering a $200,000 down payment
Find the maturity value : Question - Find the maturity value of a P60,000 note at 9 ¼% simple interest for 75 days using ordinary interest method

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the value of opportunity

Divali believes they will only need 4,000,000 gallons of jet fuel. What is the value of this? opportunity?

  Finding future or present value of bill shaffer

Bill Shaffer wishes to have $200,000 in a retirement fund 20 years from now. He can create the retirement fund by making a single lump sum deposit today. What is the maximum annual withdrawal he can make over the following 15 years?

  What is lender mortgage insurance

1. Under what conditions are multiple securities offered as collateral?

  What are the investment proportions

What are the investment proportions in the minimum-variance portfolio of the two risk funds, and what is the expected value and standard deviation of its rate of return?

  How much does he need to charge in annual rent

An investor just purchased an office building for $102,136.83. He knows for certain that he can sell the building for $180,000.00 in 5 years.

  What is the weighted average cost of capital

What is the weighted average cost of capital (WACC) for this project? What is the effect of a bond's YTM on its price?

  Calculate fixed cost

Drive in Surgery is studying the possibility of opening a satellite center in the far west part of the metro area. At a minimum, DISC needs a $190,000 profit at satellite center to keep to their financing.

  Albert pujols hit 47 home runs in 2009 if his home -run

albert pujols hit 47 home runs in 2009.if his home -run output grew at a rate of 12 percent per year what would it have

  Discuss the basic concept of risk shifting

Discuss the basic concept of risk shifting and risk-sharing underlining insurance business and adverse selection as it occurred with respect to those seeking an

  Foreign currency in the foreign exchange market

One way a government can implement direct intervention is to exchange its currency for a foreign currency in the foreign exchange market?

  What is the name for an infinite stream of constant payments

1. What is the name for an infinite stream of constant payments occurring at regular time intervals?

  What yield on gm bonds would make weston treasurer

Barth Corporation has some money to invest, and its treasurer is choosing between General Motors bonds and State of Illinois bonds.

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