Purchase Solution

Important administrative considerations

Not what you're looking for?

Ask Custom Question

Question 1 of 8
What are the important administrative considerations in the capital budgeting process?

Question 2 of 8
Why does capital budgeting rely on analysis of cash flows rather than on net income?

Question 3 of 8
What are the weaknesses of the payback method?

Question 4 of 8
What is normally used as the discount rate in the net present value method?

Question 5 of 8
What does the term mutually exclusive investments mean?

Question 6 of 8
How does the modified internal rate of return include concepts from both the traditional internal rate of return and the net present value methods?

Question 7 of 8
If a corporation has projects that will earn more than the cost of capital, should it ration capital?

Question 8 of 8
What is the net present value profile? What three points should be determined to graph the profile?

Purchase this Solution
Solution Summary

The solution discusses what are the important administrative considerations in the capital budgeting process.

Solution Preview

1. What are the important administrative considerations in the capital budgeting process?

Capital budgeting is the process undertaken, by a firm, to ascertain the most profitable use of its capital resources. In capital budgeting there exists important milestones. These are also the administrative processes which include identifying the best projects, ascertaining their cash flows, computing the best discount rate and actually applying the same rate to the projects to ascertain viability.

2. Why does capital budgeting rely on analysis of cash flows rather than on net income?

Net income basis of accounting is a measure that is fundamentally different from cash basis accounting. The major difference is in the accrual concept. The accrual concept allows expenses or income from future or past time period to be included in the current period.

Theoretically the accrual method would produce potentially invalid results if results, of other time periods, are included in the periods for which the capital ...

Solution provided by:
Chidi Ngene, M. Sc.
Education
  • B. Sc., University of Nigeria
  • M. Sc., London South Bank University
Recent Feedback
  • "Thank you."
  • "thank you Chidi Ngene.. if you have any APA references would be great"
  • "Thank you so much for your help, your explanations were easy to understand and apply!"
  • "are you able to highlight the equations used either on the xlsx or a word doc as to how each graph was formed- overall looks fine i just need help understanding this myself"
  • "Chidi Ngene, M. Sc. Was extremely helpful as without the help and guidance I would have failed, but with the help I passed. I still have a lot to learn and in need of the guidance to understand and learn more on the subject. I would recommend Chidi Ngene and BrainMass to anyone that are in need of help. Thank you!!"
Purchase this Solution
Free BrainMass Quizzes
Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Lean your Process

This quiz will help you understand the basic concepts of Lean.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

View More Free Quizzes
Related BrainMass Solutions

  • HRIS-Security and Privacy Considerations

    412048 HRIS-Security and Privacy Considerations Why are information security and privacy important considerations in the designing, development, and maintenance of an HRIS? What are the important goals and considerations of information security?

  • Ethical Considerations in Nursing Education

    These are very important considerations due to the fact that in a clinical setting both the student and or participants or patients, have rights that must be protected.

  • Ethical considerations for the future of criminal justice

    535119 Ethical considerations for the future of criminal justice Identify ethical considerations for the future of criminal justice. What may be done to reduce ethical violations in the criminal justice profession?

  • Creative Environment in the Workplace

    Are there important considerations in each area that must be addressed? How administrative procedures must be changed to facilitate the creative environment.

  • Decision Making and Allocating Resources in Health Care

    Another disadvantage of explicit rationing is that the control of financial resources by higher-level administrative leadership may also become affected by political considerations instead of needs-based considerations, which can also detrimentally affect

  • Lewis Company Product C impact on profits

    Then, I give you the best decision and seven other considerations that might impact your decision.

  • Differential Analysis: Herrestad Company

    The new customer is only willing to pay $180 per unit, direct materials costs will decrease by $15 per unit and Herrestad does not have to incur any variable selling and administrative expenses.

  • Understanding progressive discipline procedures.

    Supervisors must have a working knowledge of the organization's administrative rules as well as the employees' eligibility to utilize the administrative process.

  • HS and Organization Planning

    Managing administrative and financial needs 8. Connecting County, State and Federal Agencies 9. Feedback from participants 10.

View More Related Solutions