Would they be better served by evaluating investments

Reference no: EM13295098

As you described, before deciding on long term investments in new equipment, replacement equipment, a new factory, new products, or research & development projects we have to look at the cash flows to determine whether they are worthwhile. There are a number of possible analytical methods we can use including NPV, payback or profitability index but anecdotally it seems that "gut instinct" is the basis of decision-making with many small businesses. Is it due to the type of business or first-person knowledge that these small business owners have, which gives them the confidence to use this approach? Would they be better served by evaluating investments using NPV or some other method or does their small size necessitate a different type of decision-making? Could it be that they are actually doing the numerical analysis but not in a formal way that financial analysts and managers at larger companies might do?

Reference no: EM13295098

Questions Cloud

Would they be better served by evaluating investments : Could it be that they are actually doing the numerical analysis but not in a formal way that financial analysts and managers at larger companies might do?

If research proved that malt in beer prolonged life would : If research proved that malt in beer prolonged life would consumers change their consumption of beer? Explain your answer

Why we add buffer : Why we add buffer 7 and 1:4 toluene and 2-propanol to crude oil ahead of titrate with Cdcl2 to dtermine H2S in crude oil.And can toluene and 2- propanol be replaced with other solvent in terms of cost and safety.

Define the solution prior to the initiation of the titration : If 37.5 mL of 0.274 M HCl solution is needed to neutralize an aqueous solution of calcium hydroxide, how many grams of calcium hydroxide must be in the solution prior to the initiation of the titration experiment

What is the moment of inertia of the pulley : A textbook of mass 2.09kg rests on a frictionless, horizontal surface. What is the moment of inertia of the pulley about its rotation axis

Can goals like avoiding unethical or illegal behavior : Can goals like avoiding unethical or illegal behavior be in conflict with the goal of the firm? How does this complicate the agency problem?

How many coulombs flow past a given point in the wire : A wire carries a constant current of 218 mA. How many coulombs flow past a given point in the wire in 2 sec

How many new shares must the mitchell company sell : The investment bankers require an underwriting spread of 3% of the offering price, and the company's legal, accounting and printing expenses associated with the seasoned offering are estimated to be $750,000. How many new shares must the Mitchell ..

User Account

All Pages