Management and Organizational Studies 3370A/B Chapter Notes - Chapter 13: Tax Shield, Current Liability, Investment

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 3370A/B
• Professor: Barry Hawn

Document Summary

Chapter 13 capital budgeting decisions: capital budgeting the process of planning significant outlays on projects that have long-term implications, such as purchasing new equipment or introducing a new product. The time value of money now : capital investments usually earn returns extending over fairly long periods of time, time value of money refers to a dollar today is worth more than a dollar a year from. Discounted cash flows the net present value method: two approaches to making capital budgeting decisions use discounted cash flows net present value method and internal rate of return method. Net present value method: net present value the difference between the present value of the cash inflows and the present value of the cash outflows associated with an investment project. The total cost approach: the total cost approach is the most flexible method for comparing competing projects. Least cost decisions: some decisions don"t involve revenues.