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.
Nobody downloaded yet

See details below - Essay Example

Comments (0) Cite this document
Summary to essay on topic "See details below"
In this short essay, the author presents an analysis of the Capital Budgeting and its challenges. The author has further discussed the practical problems associated in cash flow estimation and the recommended methodology to deal with these problems. In the end the author presented some discussion points.
Download full paper
Polish This Essay
See details below
Read TextPreview

Extract of essay "See details below"

Download file "See details below" to see previous pages... pp2-3) in which the project is either accepted or rejected based on its value addition to the firm and the shareholder wealth. The author showed that the cost of capital of a project is marginalized to maximize the shareholder wealth by including rate of interest, the required rate of return to stock holders,
Let us write or edit the essay on your topic "See details below" with a personal 20% discount.. Try it now
corporate marginal income tax rate, debt to equity ratio and lifetime of the proposed project and the weighted average cost of capital. In a paper written by the same author later (Beranek. 1980. pp404-405) claimed that the Net Present Value rankings of the investment opportunities do not match equity market value unless the projects are of one period duration or are solely equity financed. He established the widely used criteria of accepting a project only if its Present Value is greater than zero and recommended that the project among multiple Mutually Exclusive projects having highest Present Value should be chosen. However, Beranek (1975. pp17) warned of some practical challenges in implementing this technique in capital budgeting due to uneven cash flows, non-straight line income tax & other depreciations, varying methods of repaying the debts, different treatment of shareholders between capital gains & dividends, errors in calculation of weighted average cost of capital in finite lived projects, etc.
His fears were not unreasonable in those years given the current sophistication of capital budgeting procedures that takes into account complex metrics like risk analysis (both systematic & non-systematic), computerized simulations & stress tests, inflation, etc. In fact Pike (1984. pp95) carried out a broad level research on relationship between sophistication of capital budgeting and firm performance to conclude that higher sophistication of capital budgeting impacts firm performance negatively.
Overall, Net Present Value has remained the most trusted method to evaluate capital budgeting decisions due to its shear advantage of evolving the "time value of money". Majority of expansions, new operations or replacement decisions are based on NPV technique (Sun & Queyranne. 2002. pp528). Although NPV has some pitfalls especially when the inputs to the NPV calculations (like interest rates, risk perceptions, etc.) vary considerably, it is the most effective technique to evaluate the true value of capital budget when evaluating the returns from a project. It may however not give a complete picture of returns from an accepted project and hence the Internal Rate of Return (IRR) technique should be used along with the NPV technique.

Cash Flow Estimation under Capital Budgeting - Issues and Resolutions

Most of the analysts associate larger risks with projects that are of longer durations. This is because the speculations of risks, interest rates, inflation, etc. become more unpredictable for longer durations. The NPV technique is perfect for a single duration project but if the inputs vary too much (like interest rates vary considerably within a short span of time), the project can no-longer be treated as single duration. Beranek (1980. pp404) presented an empirical ...Download file "See details below" to see next pagesRead More
Cite this document "See details below"
  • APA
  • MLA
(“See details below Essay Example | Topics and Well Written Essays - 1250 words”, n.d.)
See details below Essay Example | Topics and Well Written Essays - 1250 words. Retrieved from https://studentshare.org/miscellaneous/1502835-see-details-below
(See Details below Essay Example | Topics and Well Written Essays - 1250 Words)
See Details below Essay Example | Topics and Well Written Essays - 1250 Words. https://studentshare.org/miscellaneous/1502835-see-details-below.
“See Details below Essay Example | Topics and Well Written Essays - 1250 Words”, n.d. https://studentshare.org/miscellaneous/1502835-see-details-below.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
English Literature Essay (See below for details)
As in the later years with the expansion of colonialism it reached nooks and corners of the world. Eventually it became an international language. Like a flowing river, which assumes the characteristics of the area it travels; English too has donned various forms, styles and cultural influences.
7 Pages(1750 words)Essay
See details
The success of Athens as a leading city in Greece did not happen abruptly. She had to fight for her stand, while she struggled with poor resources such as unproductive land. The big and yet prominent cities of the time such as Spartan were more rich, yet greatly advantaged.
9 Pages(2250 words)Essay
Answer the questions on the paper
a/c 16,200     A/c payables 71,000     Electricity a/c 1,820     Purchases 8,000     Balance c/d(Bal. sheet) 49,730   232,750   232,750         Withdrawal Account Details Ant($) Details Ant($) Cash a/c 20,000 Balance c/d 20,000                   20,000   20,000         Motor Van Account Details Ant($) Details Ant($) Balance B/F 12,000 Acc.
5 Pages(1250 words)Essay
See details below Master Essay
Jordan (1983. pp1325-1327) presented that if the efficient market hypotheses (EMH) is viewed from an ideal perspective, then the asset prices published in the markets should be fully reflecting all the available information (including internal information of the listed companies) that shall be useful to the investors to foster their investment decisions in the stocks of corporations.
4 Pages(1000 words)Essay
This is a Book report see details below
Centuries of dissemination of the gospel message, its wide and clarion presentations through TV channels, open grounds and stadia, printed handbills, and house groups have caused enough curiosity among the general populace everywhere. The situation is enough to warrant enquiries on the more rational level.
6 Pages(1500 words)Essay
1.Masculinity and Anxiety OR 2.Romantic Love Suffering (See Details Below)
Some people, however, are not capable of assuming a position of power, and since power has been assumed to be a male priority, often times this power turned to a source of anxiety for those who were not capable of yielding it. While it might not have been
6 Pages(1500 words)Essay
This paper needs to be written on the topic of what changes one can expect when they move out of their parents home and on to their owen. See below for more details
These concerns do not only involve financial matters but also includes a lot of emotional issues for a teen. Deciding on our next move upon turning eighteen entails meticulous planning since
5 Pages(1250 words)Essay
Welfare Law (See below for details of the question)
Street v. Mountford is a groundbreaking judgment by the House of Lords. This case set the precedent that the court would use in order to determine if a person’s usage of property was a tenant or a licensee. It is true that “… case law and
6 Pages(1500 words)Essay
Advancing cultural and clinical responsiveness. see details below
eir patients and no matter how conflicting these cultures maybe, the psychologist has to be competent culturally and accommodate the culture of the patient and tailor the treatment according to that culture (Gallardo et al, 2009). In both of these responses (cultural and
1 Pages(250 words)Term Paper
ESSAY-Education Interests-See below for details
Marquette makes this possible by creating a global learning community that promotes the sharing of knowledge and experiences on an international scale. People from various backgrounds and cultures interact,
1 Pages(250 words)Essay
Let us find you another Essay on topic See details below for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us