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What is capital budgeting in project management?

Capital budgeting is the process a business undertakes to evaluate potential major projects or investments. Construction of a new plant or a big investment in an outside venture are examples of projects that would require capital budgeting before they are approved or rejected.

What are the four steps of capital investment financial analysis?

What are the four steps of capital investment analysis: Estimated the expected cash flow, assess the riskiness of those flows, estimate the appropriate opportunity cost of capital, and determine the project’s profitability and breakeven characteristics.

What are the benefits of capital budgeting decisions?

Advantages of Capital Budgeting:

  • Capital budgeting helps a company to understand the various risks involved in an investment opportunity and how these risks affect the returns of the company.
  • It helps the company to estimate which investment option would yield the best possible return.

What are the four main categories of capital budgeting?

Your capital budget contains four basic components and a separate listing for other projects that don’t fit into one of the primary categories.

  • Replacement and Repair of Existing Equipment.
  • Regulatory Requirements.
  • Expansions and Improvements.
  • Additions and Acquisitions.

What is the objective of capital budgeting?

Rationale of capital budgeting decisions The main objective of the firm is to maximize profit either by way of increased revenue or by cost reduction. Broadly, there are two types of capital budgeting decisions which expand revenue or reduce cost.

Which one of the following is a capital budgeting decision?

Which one of the following is a capital budgeting decision? Determining how much debt should be borrowed from a particular lender.

Which one of the following is included in working capital management?

Working capital management commonly involves monitoring cash flow, current assets, and current liabilities through ratio analysis of the key elements of operating expenses, including the working capital ratio, collection ratio, and inventory turnover ratio.

Which of these accounts are included in net working capital?

Financial Statements, Taxes, and Cash Flow

Question Answer
Which of these accounts are included in net working capital? I. accounts payable II. bonds payable III. equipment IV. cash I and IV only

Which form of business structure is least likely to experience agency problems?

sole proprietorships

Which form of businesses faces the most agency problems?

The answer is D) Corporation . The more removed the owner is from the manager, the higher the agency problems.

Do agency problems arise in sole proprietorship?

Agency conflicts typically arise when there is a separation of ownership and management of a business. In a sole proprietorship and a small partnership, such separation is not likely to exist to the degree it does in a corporation. However, there is still potential for agency conflicts.

Which business form is best suited to raising large amounts of capital?


Which one of these is a cash outflow from a corporation?

The correct answer to the question is a dividend payment. Sales of common stock, issuance of debt, and sales of assets would all result in cash…

What is the structure of a corporation?

Corporate structure refers to the organization of different departments or business units within a company. Depending on a company’s goals and the industry in which it operates, corporate structure can differ significantly between companies.