FIN 155 WEEK 5 CAPITAL BUDGETING
Our textbook and lesson discuss some considerations that should be taken into account when doing capital budgeting. Incremental earnings, interest expenses, taxes, opportunity costs, externalities, sunk costs, cannibalization or erosion, depreciation, and salvage value; as well as others. For your first posting, explain in detail what defines capital budgeting. Then, explain how two of these considerations above affect capital budgeting.
For your second posting, describe a potential capital expenditure project from the industry in which you now work or an industry in which you are interested. What is the project? Describe and provide an approximate value of the initial cash flow. Describe and provide an approximate value of the annual cash flow. Provide an estimation of the life of the project, as well as the exit costs.
For your next posting, review the second posting of another student. Then, calculate the NPV and IRR of the project. Based on your workings and assumptions, indicate whether you would accept the project, explaining why.
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Posted 12 Dec 2017 01:12 PM
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