Profitability Index (PI)
Jennifer edwards Profitability index is a ratio that identify and compares the relationship between the total costs involved in the project and the profit returned from that project. The ratio of profitability…
Simple Rate of Return Method
Shamsa Rafique Simple Rate of Return Method: Learning Objectives: Compute the simple rate of return for an investment project. Definition and Explanation: The simple rate of return method is another capital budgeting…
Screening Decisions and Preference Decisions
Screening Decisions and Preference Decisions: Learning Objectives: Define, explain and give examples of screening and preference decisions. Capital budgeting decisions fall into two broad categories: Screening decisions. Preference decisions. Screening…
Income Tax and Capital Budgeting Decisions
Income Tax and Capital Budgeting Decisions: Learning Objectives: Include income taxes in a capital budgeting analysis. In our discussion of capital budgeting decisions in this chapter, we ignored income taxes…
Budgeting and Planning
After studying Budgeting and Planning article you should be able to: Understand why organizations budget and the processes they use to create budgets. Prepare a sales budget, including a schedule…
Future Value and Present Value Tables
Sana Ahmed Future Value and Present Value Tables Future Value Tables: Table 1: Future Value of $1 Table 2: Future Value of Ordinary Annuity (Annuity in Arrear - End of Period Payments)…
Present Value and Future Value – Explanation of the Concept
Abida Rehman Present Value and Future Value - Explanation of the Concept: Learning Objectives: Understand present value concepts and the use of present value tables. Compute the present value of a single…
Review Problem 2: Comparison of Capital Budgeting Methods
Review Problem 2: Comparison of Capital Budgeting Methods Lamer company is studying a project that would have an eight-year life and require a $2,400,000 investment in equipment. At the end…
Cash Budget Definition
Cash Budget Definition: A detailed plan showing how cash resources will be acquired and used over some specific time period. Click here to read full article about cash budget
Cash Budget | Cash Budgeting
Cash Budget | Cash Budgeting: Learning Objectives: Define and explain a cash budget. What is the purpose of a cash budget How to prepare a cash budget. Definition and Explanation:…
Review Problem 1: Basic Present Value
Review Problem 1: Basic Present Value Computations: For each of the following situations is independent. Workout your own solution to each situation, and then check it against the solution: Situation…
Capital Budgeting Definition
Capital Budgeting Definition: The process of planning significant outlays on projects that have long-term implications such as the purchase of new equipment or the introduction of a new product.
Capital Budgeting Decisions
Learning Objectives: Evaluate the acceptability of an investment project using the net present value method. Evaluate the acceptability of an investment project using the internal rate of return method. Evaluate…