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The availability of funds effects the capital budgeting decisions. The amount of funds available for capital expenditures will be either limited or unlimited. Funds would be considered unlimited when a firm is willing to acquire, through borrowing or equity, any amount of capital as long as the return on the investment is higher than the cost of the funds. When the funds that a firm will make available for capital investment are limited, and the firm has more opportunities for profitable investments than the limited funds can cover, the condition is described as capital rationing.
Your assignment is to focus on the following:
Describe how capital-budgeting decision criteria would be different in a capital-rationing situation than in a situation in which capital rationing was not necessary, and explain the reasons for the difference in criteria.
Describe the discounted-cash flow technique or techniques you would recommend in a capital-rationing situation and explain your reasons for your recommendation.
Write your response as a one-page memo. Post your memo in the discussion forum and solicit feedback from your classmates.
You are assigned the duty of ensuring the availability of 100,000 yen for the payment that is scheduled for next month. Considering that your company possesses only U.S. dollars, identify the spot and forward exchange rates. What are the factors t..
A debit balance in the Allowance for Doubtful Accounts
The actual return on plan assets was $1 million although it was expected to be $6 million. On average, employees' remaining service life with the company is 18 years.
A company has a standard cost system. In July the company purchased and used 22,500 pounds of direct material at an actual cost of $53,000; the materials quantity variance was $1,875 unfavourable; and the standard quantity of materials allowed for..
the auditor of Glaxoa Corporation (Glaxoa) for the current year. For each situation:1 Describe the corrections, if any, you would propose to management to make the financial statements conform to GAAP.2.Identify the type of opinion you would issue i..
Keefe, Inc., a calendar-year corporation, acquires 70% of George Company on September 1, 2009 and an additional 10% on April 1, 2010. What is the controlling interest in consolidated net income for 2010?
It has also issued long-term bonds at an interest rate of 7 percent. It pays tax at a marginal rate of 35 percent.a. What is Omega's after-tax WACC?
A company believes it can sell 5,000,000 of its proposed new optical mouse at a price of $11.00 each. There will be $8,000,000 in fixed costs associated with the mouse. If the company desires to make a profit $2,000,000 on the mouse, what is the t..
If in preparing a worksheet a adjusted trial balance amount is sorted to the wrong work sheet column will balance on the completing worksheet, but with the wrong net income, if the amounts sorted in error is ?
write a two to three 2-3 page paper in which youdescribe the purpose of each financial statement. determine which one 1
If Charming Confections Company charges each division 12% for capital employed, compute residual income for the Peanut and Plain divisions. Compute the ROI for each division.
Management is considering dropping product lines A and B.If 50% of the fixed costs for dropped products could be avoided, what recommendation would you make to management? Quantify you answer.
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