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Capital Rationing Model

Most organizations are in the business of making money. This can be done through providing services and products or through investments. However, how an organization determines which investments are the right ones is very important. One method of doing this is capital budgeting. According to Costa in his article, "An approximate solution approach for a scenario-based capital budgeting model," capital budgeting or investment appraisal is concerned with the selection of a portfolio of projects for investment under budget constraints and aiming to a maximal return value. Please read the article by Costa and respond to the following questions.

http://www.academia.edu/415007/Capital_Rationing_Problems_under_Uncertainty_A_Probabilistically_Constrained_Approach._Accepted_to_Computational_Optimization_and_Applications

Discuss the concept of capital budgeting? What is it? What are the advantages and disadvantages of capital budgeting? What does the author say about DCF and IRR? What model does he suggest instead? Briefly discuss the heuristic procedure for finding feasible solutions for a dynamic capital budget model (M1). Briefly discuss the model (M1) and the technical difficulties for solving it.
Lastly, discuss the new model (M2) proposed by the authors. Why is this the better model? How do you see it being used in health care?

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Capital Rationing Problems under Uncertainty
Most organizations are in the business of making money. This can be done through providing services and products or through investments. However, how an organization determines which investments are the right ones is very important. One method of doing this is capital budgeting. According to Costa in his article, "An approximate solution approach for a scenario-based capital budgeting model," capital budgeting or investment appraisal is concerned with the selection of a portfolio of projects for investment under budget constraints and aiming to a maximal return value. Please read the article by Costa and respond to the following questions.
http://www.academia.edu/415007/Capital_Rationing_Problems_under_Uncertainty_A_Probabilistically_Constrained_Approach._Accepted_to_Computational_Optimization_and_Applications
Discuss the concept of capital budgeting? What is it?
Capital budgeting is the selection of an investment projects with the aim of maximizing the total value while satisfying the capital budget constraints imposed over the planning horizon. Capital budgeting is the process by which the firm decides which long term investments to make because the potential long -term investments are expected to generate cash flows over several years. The decisions to accept or reject a Capital Budgeting project depends on an analysis of the cash flows generated by the project and its cost. The following three Capital ...

Solution Summary

Capital budgeting is the selection of an investment projects with the aim of maximizing the total value while satisfying the capital budget constraints imposed over the planning horizon. Capital budgeting is the process by which the firm decides which long term investments to make because the potential long -term investments are expected to generate cash flows over several years.

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