Which of the following is NOT an advantage of the capital budget process? Cautious review of infrastructure projects to prevent mistakes Routine purchase of infrastructure assets Facilitate borrowing to finance all infrastructure projects Improve equity across generations
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Which of the following is NOT an advantage of the capital budget process?
-
Cautious review of infrastructure projects to prevent mistakes
-
Routine purchase of infrastructure assets
-
Facilitate borrowing to finance all infrastructure projects
-
Improve equity across generations
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- Which of the following is a problem associated with capital budgeting? Select all that apply. Long-term strategic planning for resource allocation Unsustainable budget infrastructure that will have an impact on future generations Miscalculating or poor estimation of projected costs Fluctuating economics and financial marketsIn practice, external factors can impact a capital investment. Give a current external factor that may currently Impact or cause instability of capital spending either here or abroad.Participation #6: Why is it desirable to construct capital budgeting rules so that higher-risk projects become less acceptable than lower-risk projects?
- Capital budgeting and cost of capital plays an important role in taking long term financial decisions. Which type of potential factors are important when we take decision on the basis of Capital budgeting and cost of capital.Which of the following is a problem with using payback period for capital budgeting decisions bias against long term projects in favor of short term projects bias against short term projects in favor of long term projects time value of money conceptual violationWhy does capital budgeting rely on an analysis of cash flows rather than on net income? Base your answer on the accounting principles of recognizing and reporting revenue and expenses.Describe two capital budgeting decisions based on the time value of money. Which of the two methods would you select for a capital budgeting project and why?
- Capital budgeting projects are classified as either independent projects or mutually exclusive projects. [Consider NPV, IRR, Payback Period, and Profitability Index] What is a independent project? What is a mutually exclusive project? Why (or under what circumstance) should either be accepted?Which of the following best describes the process of capital budgeting? a Forecasting revenues and expenses hmiting funds for capital improvements without considering the profitability of proposed prot determining a companys short term goals d. determinung the amount to spend on fixed assets and which fixed assets to purchaseWhen evaluating projects for consideration in capital budgeting identifying the appropriate cash flows is a critically important first step. In general, should the following be included in the cash flow projections of a project? Revenues, Cost of Sales, Depreciation, Cannibalization of other firm sales, Interest, Profits, Overhead and Taxes. Why or why not?
- What factors should you keep in our mind as a financial manager when selecting methods of capital budgeting? and Why is rebalancing between methods of capital budgeting are important?how a failed capital project may shape the future strategy of investment capital.1. Define capital expenditures and provide examples of capital expenditures.2. Cash flows for a particular project should be measured on an incremental basis. What does that mean?3. How does the opportunity cost concept affect capital budgeting cash flow determination?4. What factors should be considered when estimating a new business’ NINV? Is it any different for an asset replacement project. 5. Why is depreciation, a noncash expense, considered when estimating a project’s net cash flows?6. What are the potential tax consequences of selling an old asset in an asset replacement investment decision?