Archive about 'Capital Budgeting'

The Importance or Benefits From Having Established A Capital Expenditure Budget

Tweet I work in a medium size company. It is budget time. Is it necessary for me to prepare a Capital Expenditure Budget. Can you tell me the importance the benefits derived from preparing such budget? Answer: As we understand that the role of a capital expenditure budget is to take account of all expenditures […]

What is Terminal Cash Flows In Capital Budgeting Analysis?

Tweet Append below the explanation of terminal cash flows and a simple example as illustration: Terminal Cash Flows: Is the last stage of a project’s cash flows re: the cash flows that will occur only at the project’s termination/ending. Examples are: salvage/scrap value of new machines less tax and net working capital recovered Illustration: Company […]

Guidelines In Capital Budgeting Analysis

Tweet As capital budgeting involves substantial initial outlay and years( at least more than one year) to reap the benefits, it is critically important to understand some of the cardinal principles or rules or guidelines when performing this capital budgeting exercise. Append below in brief pertaining to:   GUIDELINES/PRINCIPLES ON THE CAPITAL BUDGETING ANALYSIS   […]

Capital Budgeting Process, Types Of Capital Projects And Types Of Capital Budgeting Decisions

Tweet Earlier article explain what’s capital budgeting and its importance. Append below explains the process, types of capital projects and capital budgeting decisions a firm needs to embark on: Capital Budgeting Process Involves : ·               Generating long-term investment proposals which are consistent with a firm’s long term objectives ·              Estimating the relevant after-tax incremental cash […]

Capital Budgeting And Its Importance

Tweet Below explain the meaning of capital budgeting and its importance: Capital Budgeting:              Is a decision making process of selecting and evaluating long term investments viz investing in fixed assets or capital expenditure(capex)          This will require a substantial initial outlay and expect to produce benefits/results over a period of more than one […]

Capital Investment Appraisal -“ Main Topic

Tweet Capital Investment Appraisal Capital Investment appraisal form part of the examination question. To understand it, the student needs to understand basic principles of time value of money, future value of money and present value of money,the different types of investment appraisal and the advantages and disadvantages of the various methods. Article No. Heading 1 […]