Nobody downloaded yet

Capital Budget Model - Term Paper Example

Comments (0) Cite this document
Summary
The author of this paper "Capital Budget Model" comments on the capital budgeting. According to the text, it is a planning process utilized in determining whether the long-term investments of an organization are worth getting funds through the organization’s capital structure…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER94.6% of users find it useful
Capital Budget Model
Read TextPreview

Extract of sample "Capital Budget Model"

Download file to see previous pages Financial modeling as explained above is the task of creating a representation of a real financial situation in the world. It consists of the process of forecasting the performance of a financial portfolio or asset of a business through the use of a mathematical or scientific model in order to provide management of a business with adequate information to make informed decisions on the types of portfolio and assets to finance in the future. To understand more about financial models, it is important to critically review them and understand why they are important in today’s financial world. Let us begin with a critical review of financial models.
Financial modeling consists of the process of forecasting the performance of organizations and assets, through the use of relationships among a number of variables. This provides the management of an organization with insight into the short-term and long-term environment of business in order summarize specific events to provide direction concerning possible alternatives or actions management can take to achieve set goals and objectives. Financial models can be created in numerous ways, either by the use of a pen and a paper, or computer software. What is most significant, however, is not the type of user interface that is used, but the fundamental logic that incorporates the model. For example, a model can summarize the returns of an investment, such as Sortino Ratio, or it may assist approximate the direction of the market, such as Fed Model. ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Capital Budget Model Term Paper Example | Topics and Well Written Essays - 2500 words”, n.d.)
Capital Budget Model Term Paper Example | Topics and Well Written Essays - 2500 words. Retrieved from https://studentshare.org/finance-accounting/1701176-capital-budget-model
(Capital Budget Model Term Paper Example | Topics and Well Written Essays - 2500 Words)
Capital Budget Model Term Paper Example | Topics and Well Written Essays - 2500 Words. https://studentshare.org/finance-accounting/1701176-capital-budget-model.
“Capital Budget Model Term Paper Example | Topics and Well Written Essays - 2500 Words”, n.d. https://studentshare.org/finance-accounting/1701176-capital-budget-model.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Capital Budget Model

Capital asset pricing model

...? and Section # of Capital Asset Pricing Model is a tool extensively used to value assets in the financial sector. It has been extensively used in calculating the required return of investment products. The capital asset pricing model was introduced in the 1960s by William Sharpe; since then it has been considered as the cornerstone of predicting the required return on an investment. Required Return: Risk free rate + ? (Average Market Return –Risk free rate) Where ? is the beta value of the financial asset The basic assumptions of this model pose as disadvantageous for this model to be considered as a perfect representative of required...
1 Pages(250 words)Essay

Capital Asset Pricing Model

...Capital Asset Pricing Model Purpose of the Paper: The purpose of the paper is to understand and workout the cost of equity of a given company. The cost of equity of a company is associated with risk associated in investing in that company. Higher the risk associated in equity investment, higher will be the cost of equity for shareholders. Capital asset pricing model can be employed to work out the cost of equity. The minimum rate of return that shareholders would ask for is also known as the cost of equity. Answer 1. The company under consideration is Nvidia. The systematic risk coefficient is available from the site yahoo.com, which shows beta of the company, Nvidia...
5 Pages(1250 words)Research Paper

Capital Asset Pricing Model

...their capital expenditure strategies by focusing on various factors affecting capital expenditure. This concept is also useful for financial managers to arrive at reasonable conclusions on how to value real assets. Although many of the critics claim that CAPM model cannot be used for valuing real assets, majority of corporations are still cantered on this model. However, scholars like Lee et al (2009) strongly believe that CAPM can be very useful in real asset valuation. While analysing the historical growth phases of CAPM, it seems that corporate managements have been using this model in their all areas of financial analysis and planning since the...
7 Pages(1750 words)Essay

The Capital Budget

...? The Capital Budget and The Capital Budget Payroll Forecast The benefits of increasing the council’s employee compensation include, most importantly, motivation. This will encourage the employees to become more productive. The management should however keep in mind that compensation should not be overused as a motivator because what really motivates good employees is the ability to achieve successful completion of their projects. It will also be hoped that this increase will enhance team cohesion when awarded to teams, hence increasing the productivity level. Furthermore, better compensation increases the employee morale, generally, given that the increase is awarded in...
4 Pages(1000 words)Research Paper

Capital asset pricing model

...? CAPM by + A) Discuss the main theoretical limitations of the Capital asset pricing model. Capital asset pricing model assumptions are unrealistic and deviate far from the real life happenings. The model assumes that short-term government securities are risk free. It is difficult to find risk free securities. Government securities are unlikely to be defaulted but factors such as inflation creates uncertainty on the real rate of return. The model also assumes that the lending rate and the borrowing rate are equal. In practice, these two rates differ and therefore, the model will not hold in a real life scenario. The...
4 Pages(1000 words)Essay

Capital budget purchase

...? Capital Budget Capital Budget for the Latest Electronic Health Record The capital budgetis very crucial for any organization that wants to make purchases or long term investment for assets such as building, equipment and vehicles. It differs with operating budget whose main objective is to cater for the operating expenses of the organization such as payment of employee salaries which is recurring and happens weekly, fortnightly or monthly (Caren, 2013). As the manager for the surgery department in our hospital, I decided to go for the latest Electronic Health Record after a thorough research that gave me many priorities. This item was...
4 Pages(1000 words)Term Paper

Capital Asset Pricing Model

... pricing model is one option that most financial analysts prefer. The succeeding discussions will tackle on the use of capital asset pricing model as basis for discounted multi-period risky cash flows. Capital Budgeting Models The prevalence of investments has led to several ideas particularly on the side showing benefits attributed to such activities. For investors, it is important to determine the exact amount that will be gained from the investment. Essentially, there were several methods developed to address this need. Taggart (1999) created capital budgeting analysis model that makes use of the discounted cash flow. Accordingly, this model enables investors to forecast the values of cash flow components. Among the models... , this is...
10 Pages(2500 words)Research Paper

Capital Asset Pricing Model

...CAPITAL ASSET PRICING MODEL Affiliation Capital Asset Pricing Model The capital asset pricing model (CAPM) has a number of components that determine the individual stock. The components that determine in entirety the individual stock and hence the CAPM they include the risk free rate in the CAPM, the Beta of the security, the expected market return and the equity market premium. The risk free rate is the government bond ideally, that has a fix ten years. The Beta is the true measure of the risk that is in the stock that one has invested on. With the risk in it, measure the volatility of the investment. It is in this Beta that determines the wave of up and down the price of stock will oscillate. The expected market returns are all... ...
1 Pages(250 words)Assignment

Capital Budget

...Capital budget River County is highly populated. A lot of people living in the county have paid the city council to collect their garbage. To meet the expectations of the County members who have paid for garbage collection, trucks must be purchased. I have included two garbage trucks in my budget. The garbage trucks go for a total of $240,000. This amount is enough compared to the fact that the expected lifetime of the two trucks is ten years. This budget, therefore, minimizes on any other expenditure for garbage trucks in the next decade. The trucks will guarantee faster garbage collection. The trucks will also ensure that we can handle all requests for garbage...
3 Pages(750 words)Assignment

Capital Budget case study

...Instant Dinners Inc. Instant Dinners Inc The Net Present Value obtained on the basis of the revised estimates is negative $590,280 (See Attached Excel File). 2. Leland Forrest could consider the directives of Rolland to repress the findings of the net present value analysis keeping in view the following ethical standards and their relevance to the situation. Competence: The directive of Rolland to repress findings of NPV analysis is against this standard. It has negative implications for the business. Confidentiality: Leland needs to maintain confidentiality. However, she cannot hold back information that has negative implications for the business from the board of directors Integrity: Rolland’s decision not to disclose... Dinners Inc....
2 Pages(500 words)Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Term Paper on topic Capital Budget Model for FREE!

Contact Us