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What is capital rationing? Should a firm practice capital rationing? Why?
Capital rationing is the practice of putting dollar limits on what will be invested in new capital budgeting projects. Private corporations, partnerships and Proprietorships are in a position to do whatever the owners wish. It can be disputed, but, that for a publicly traded corporation capital rationing may not be steady with maximizing the value of the firm. This is because various value adding projects may be rejected if they would cause the firm to go beyond its self imposed capital rationing limit.
limitations of historical cost
the stock of akpan ltd performs well during recessionary periods, and the stock of okon ltd does well during growth periods. both stocks are currently selling for Rs 100 per share
Our geologist, Rebecca Paulka, has estimated from the earlier exploration that the Malian prospects have a 30% likelihood of containing economic quantities of uranium ore, the Nige
Q. What is Purchasing Power Risk? Variations in the returns are caused also by the loss of purchasing power of currency. Inflation is the reason behind the loss of purchasing p
• Debtors :- Working Capital tied up in debtors must be estimated on the basis of cost of sales (excluding depreciation): [Cost of goods produces (that is raw materials + wages
Max Z = 107x1+x2+2x3 Subject to 14x1+x2-6x3+3x4=7 16x1+x2-6x3 3x1-x2-x3 x1,x2,x3,x4 >=0
Q. Equity Method of Accounting? Equity Method of Accounting - Investors cost basis is adjusted up or down (according to the % of stock ownership) as investee's retained earning
It is in the form of third-party guarantees which protect against losses up to a particular fixed level. This is available in the form of a corp
1) Future cost and historical cost: financial decision is based on the future cost and not on the historical cost. The decision related to the future and hence the cost are likely
How do we calculate the payback period for a proposed capital budgeting project? What are the major criticisms of the payback method? We compute the payback period for a proposed
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