please answer completely and correctly all questions mayest-00068ick-m 151002777
ID: 2782264 • Letter: P
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please answer completely and correctly all questions
mayest-00068ick-m 1510027770994 DAAA0510 CQSearch Graded Assignment Due Thursday 11.09 17 at 0500PM Attempts: Keep the Highest: /7 1. The basics of capital budgeting Aa One of the most important financial management activities that a firm undertakes is its evaluation and allocation af investment funds to support its future survival and growth. These activities may be motivated by the desire to expand the firm's revenues, reduce its costs, or satisty its mandatory or voluntary legal, health, and saety requirements. They may have, more or less, multiyear effects on the organization and may or may not be considered as capital budgeting activities. Capital budgeting is the process of planning and controlling investments in assets that are expected to produce cash flows for one year or less. This statement is: O True O False The capital budgeting process in a company involves evaluation of cash flows, risk analysis, correlation with the portfolio of projects in the company etc. To make this process more streamlned, firms identily whether the projects qualify as a capital budgeting project or not and generally analyze them in different vertical categories which of the following are examples of a capital budgeting project? Check ail that apply Houston Horticulture Co.'s acquisition of a new parcel of real estate Edinburgh Exports Inc.'s replacement of an existing piece of equipment Marston Manufacturing Co.'s financing of its monthly average amount of accounts receivable For which of the following reasons are capital budgeting decisions important to a business organization? Check all that apply Capital investments are relatively inexpensive Capital investments have mitiyear life spans, so mistakes linger for a long time. Capital investments are difficult to reverse without incurring large additional expenses.Explanation / Answer
1.) This statement is False as capital budgeting involves estimating cash flows and returns for long term projects and not limited to 1 year only. This estimate is very important for the survival and growth of the company.
2.) Following will be categorized as Capital Budgeting:
>> Houston Horticulture's Purchase of Real Estate
>> Edinburgh Exports Inc replacement of existing piece of equipment
3.) The capital budgeting decisions are important to an organization because:
>>Capital budgeting decisions have multi year life spans, so mistakes linger on for a long time.
>> Capital costs are diffcult to reverse without incurring additional expenses.
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