chapter 11 notes

chapter 11 notes - BUS 320 Chapter 11 Notes 1 Capital...

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1 BUS 320 Chapter 11 Notes
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2 Capital Budgeting The process of planning expenditures on assets whose cash flows are expected to extend beyond 1 year. Firms create capital budgeting projects Corporations have a major influence on their projects’ results Firms growth and ability to remain competitive depends on flow of ideas relating to: New products Improving existing products Ways to operate more efficiently
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3 Strategic Business Plan Lon-run plan that outlines in broad terms the firm’s basic strategy for the next 5-10 years.
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4 Project Classifications Replacement:Needed to continue current operations Replacement:Cost reduction Expansion of existing products or markets Expansion into new products or markets Could change the fundamental nature of the business. Safety and or environmental projects
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5 Methods for evaluating Capital Budgeting Projects Net Present Value (NPV) Internal Rate of Return (IRR) Payback Period Discounted Payback Period
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chapter 11 notes - BUS 320 Chapter 11 Notes 1 Capital...

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