Capital budgeting exercise - free download as powerpoint presentation (ppt), pdf file (pdf), text file (txt) or view presentation slides online capital budgeting and npv. Capital budgeting exercise 2 your company has spent $250,000 on research to develop a new computer game the firm is planning to spend $1,400,000 on a machine to produce the new game.
Exercise-6 (capital budgeting with unequal proposal lives) exercise-7 (payback period method- even cash flows) exercise-8 (computation of payback period – uneven cash flows.
Exercise: capital budgeting 1belanger construction is considering the following project the project has an up-front cost and will also generate the following subsequent cash flows: t = 1 $400 t = 2 500 t = 3 200 the project's payback is 15 years, and it has a cost of capital of 10 percent. Risk analysis in capital budgeting optimal capital budget capital budgeting strategic business plan: a long-run plan that outlines in broad terms the firm’s exercise: check npv l = 10040 decision rule: if npv 0, accept the project if npv 0, reject the project 62 independent vs mutually exclusive projects.
Capital budgeting exercise 2 your company has spent $200,000 on research to develop a new computer game the firm is planning to spend $300,000 on a machine to produce the new game. Capital budgeting is very obviously a vital activity in business vast sums of money can be easily wasted if the investment turns out to be wrong or uneconomic the subject matter is difficult to grasp by nature of the topic covered and also because of the mathematical content involved. Capital budgeting exercises capital budgeting exercise 1 you are considering the purchase of one of two machines used in your manufacturing plant machine a has a life of two years, costs $1500 initially, and then $400 per year in maintenance costs.
The point being made, of course, is that no one operates in a vacuum and trying to do capital budgeting analysis assuming such will yield unrealistic results the firm might use this information to keep competitors away by building another facility within the first couple of years and pricing the product such that it is not economical for.
Capital budgeting is the process in which a business determines and evaluates potential large expenses or investments these expenditures and investments include projects such as building a new plant or investing in a long-term venture. Determine the npv, irr, payback, and eaa for the capital budgeting project with the following cash flows.
Risk analysis in capital budgeting optimal capital budget capital budgeting strategic business plan: a long-run plan that outlines in broad terms the firm’s exercise: check irr l = 135492% decision rule: if irr r, accept the project if irr r, reject the project.