Use of capital budgeting techniques in strategic management

Using net present value, determine the proposal's appropriateness and economic viability.

Prepare a report explaining your calculations and conclusions. Answer the following in your report:

o Explain the effect of a higher or lower cost of capital on a firm's long-term financial decisions.

o Analyze the use of capital budgeting techniques in strategic financial management.

ยท Format your report according to APA standards.

Proposal C: New Advertising Program

A company wants to invest in a new advertising program. Using the NPV method of capital budgeting, determine the proposal's appropriateness and economic viability with the following information:

? The new program will increase current sales, $10 million, by 20%.
? The new program will have a profit margin is 5% of sales.
? The new program will have a 3-year effect.
? The new program will cost the company $200,000 in the first year.

Solution Summary

Response helps in guiding about the use of capital budgeting techniques in strategic financial management