BMGT 221 Chapter Notes - Chapter 13: Net Present Value, Capital Budgeting, Cash Flow
13 Dec 2017
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Chapter 13 capital budgeting decisions accounting 2. Capital budgeting used to describe how mangers plan significant investments in porjects that have long term implications. Screening decisions relate to whether a proposed project is acceptable whether it passes a preset hurdle. Preference decisions by contrast, relate to selecting from among several acceptable alternatives. Any salvage value realized from the sale of old equipment can be recognized as a reduction in the initial investment or as a cash inflow. Working capital current assets current liabilities. From a cash flow standpoint, a reduction in costs is equivalent to an increase in revenues. Any working capital tied up in a project can be realease for use elsewhere at the end of the project and should be treated as a cash inflow at that time. Treats a dollar received today as being of equal value to a dollar received at any point in the future.
