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106 Financial Management Companies in India consider the following as the four most important contributors of investment risk: s ...

Capital Budgeting^107 Authorization It may not be feasible in practice to specify standard administrative procedures for approvi ...

108 Financial Management customer image, or companies in USA consider legal matters important in investment analysis. Due to the ...

Capital Budgeting^109 There is little value in refining an analysis that does not consider tire most appropriate alternative and ...

110 Financial Management One more example is that of an Indian subsidiary of a giant multinational that looks for projects in hi ...

Capital Budgeting^111 Capital Budgeting Decision-making levels For planning and control purposes, three levels of decision-makin ...

112 Financial Management Methods of Appraisal Investment appraisal methods can be divided into two basic areas. One in which no ...

Capital Budgeting Evaluation Techniques^113 Payback Period Payback period is the most widely used technique and can be defined a ...

114 Financial Management The limitations of the payback criteria, however, are very serious: l It fails to consider the time val ...

Capital Budgeting Evaluation Techniques^115 Average income after tax B : -------------------------------- Average investment Ave ...

116 Financial Management The shortcomings of the accounting rate of return criterion seem to be considerable: l It is based upon ...

Capital Budgeting Evaluation Techniques^117 is designed to report events with respect to accounting periods and for profit centr ...

118 Financial Management There is one more difference. Alternative 1, assumes that the interest and loan repayment obligations a ...

Capital Budgeting Evaluation Techniques^119 n = life of the project k = cost of capital used as the discount rate Here C0 is the ...

120 Financial Management a negative net present value) will not be accepted just because it is combined with a good project (whi ...

Capital Budgeting Evaluation Techniques^121 Initial investment : Rs. 1,00,000 Year 1 25,000 Year 2 40,000 Year 3 40,000 Year 4 5 ...

122 Financial Management Internal Rate of Return When the present value of cash inflows are exactly equal to the present value o ...

Capital Budgeting Evaluation Techniques^123 The actual calculation of the rate is a hit-and-miss exercise because the rate is un ...

124 Financial Management Comparison of Discounting Methods In ordinary circumstances, the two discounting approaches will result ...

Capital Budgeting Evaluation Techniques^125 Capital Rationing In terms of financing investment projects, three essential questio ...