What is the difference between the two types of decisions

Assignment Help Managerial Accounting
Reference no: EM133036194

Question - In this chapter we discuss making decisions about projects that have long-term implications - specifically - Capital Budgeting decisions. The methods we use to solve these types of problems are the Net Present Value (NPV) method & the Internal Rate of return (IRR) method. Both methods involve discounting cash flows. Discounting means determining the Present Value of a future cash flow.

There are two types of capital budgeting decisions - screening decisions & preference decisions.

1) What is the difference between the two types of decisions?

2) Can we use both the NPV method and the IRR method to solve both types?

3) Why do we decide to do a project if the NPV of the project works out to be zero or a positive number? What does it mean when the NPV works out to be a negative number?

Reference no: EM133036194

Questions Cloud

Introducing mcdonald mcplant burger : Over the last couple of years, you have probably noticed the increase in fast food restaurants that are serving plant-based meat burgers.
Describe how you promoted diversity : Describe lessons learned in the interview that can be applied to promote social, economic, and environmental justice - Describe how you promoted diversity
Prepare Incremental cost analysis : The company can purchase it for $7.00 per unit and sell it for $10.90 per unit If it does so, Prepare Incremental cost analysis
Applying social work practice skills : Review of your work, and the examination of your feelings and emotions - Applying social work practice skills - Demonstrate Ethical and Professional Behavior
What is the difference between the two types of decisions : Discounting means determining the Present Value of a future cash flow. What is the difference between the two types of decisions
Practice and benefits process : Practice and Benefits - Review the readings in this unit along with the Process Recording assignment instructions
Should your company replace its year-old printer : Your company's tax rate is 21% and the opportunity cost of capital is 10%. Should your company replace its year-old printer
What is Wyatt net profit : In 2022, Wyatt's sales increase to 3,000 units due to increased demand for its games from tech startups. What is Wyatt's net profit for 2022
What is the term yield curve : What is the term "yield curve". What changes does a steepening yield curve imply?

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Conpute how much manufacturing overhead will be applied

How much manufacturing overhead will be applied to job#012? Job #012 has accumulated $35,000 of direct materials and $5,000 of direct labour costs

  What is the fixed cost at hours

The variable rate is found to be $3 per hour and the high point is 200 hours at a total cost of $1,800. What is the fixed cost at 350 hours?

  What is the rationale that can be adopted in expounding

What is the rationale that can be adopted in expounding on the rising number of mergers with firms or corporations in distinctive industries?

  Prepare the journal entry to record the transfer of the good

PACC6001: Management Accounting Assignment. Prepare the journal entry to record the transfer of the goods from the Assembly

  Determine what happens to overhead rates where direct labor

When automated equipment replaces direct labor, Determine what happens to overhead rates where direct labor is the allocation base?

  What are the broad legal requirements applicable

What are the broad legal requirements applicable to corporate takeovers in Australia? What options do boards have to prevent a takeover?

  What is the payback period of the investment in years

An investment opportunity costing 600,000 is expected to yield net cash flows of 120,000 annually for 10 years. What is the payback period of the investment

  What type of cookie maximize company contribution margin

Assuming no raw material constraints and unlimited demand for cookies, what type of cookie would maximize the company's contribution margin?

  Prepare a cash disbursements budget for year

Sales are all on account (no cash) and are estimated to be collected over a three-month period, with 70 percent collected in the month of sale, 25 percent collected in the next month, and 4 percent collected in the third month. The remaining 1 ..

  Identify the contribution margin

Given the provided date, identify the contribution margin. The records of the Dodge Corporation show the following results for the most recent year

  Perform an accurate evaluation of the investments

How do examine one approach to perform an accurate evaluation of the investments. Suggest how this knowledge may impact management's decisions.

  Prepare the necessary journal entries to recognise

Giant Ltd acquired 80 percent share capital, Prepare the necessary journal entries to recognise the non-controlling interest as at 30 June 2019.

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