Why is discounted cash flows better for making tactical decisions rather than making strategic decisions?

Related BrainMass Solutions

• Cost allocation, master budgeting, capital decisions

  Tactical decision making consists of choosing among alternatives with an immediate or limited end in view. Tactical decisions can be short term or small scale in nature but must be made so that larger strategic objectives are served.

• Managerial Accounting: Business Decisions and Costs

  Explanation of terms, with examples and reasons why each concept is relevant or not relevant to decision-making: Sunk cost These are cash flows that have already taken place regardless of the decision to be made.

• Capital Budgeting and Cash Flows

  Why is there a focus on cash flows rather than accounting profits in making capital-budgeting decisions? Why such an interest in incremental cash flows rather than total cash flows?

• Capital budgeting and Non-financial Issues

  Example 1 Some companies use both financial and non-financial issues to determine capital budgeting decisions. For example, the ultimate goal is to tie forecasts more closely to Texaco's strategic and tactical plans.

• Making Capital-Budgeting Decisions

  291999 Making Capital-Budgeting Decisions Why do we focus on cash flows rather than accounting profits in making our capital-budgeting decisions? Why are we interested only in incremental cash flows rather than total cash flows?

• Why is the time value of money so important in capital budgeting decisions?

  There is a time preference for money is an individual's preference for possession of a given amount of money now, rather than the same amount at some future time. The cash flows of the projects has to be adjusted by the time value of money.

• Capital Budgeting & Biases: Eliminating Manager Biases

  It further requires estimation of future cash flows, applying the appropriate decision techniques, and making decisions.

• Planning & Budgeting: influence the law has on pricing decisions; value of DCF methods

  In order to properly evaluate R&D projects, some corporations are now using an options approach rather than the traditional discounted cash flow (DCF) technique.

• Break-Even Use In Management Decision-Making

  If the discounted value of the cash flows exceeds the required investment outlay in cash, then the project is acceptable. There are other objections.