CeramiT_M4_A2 -Applying Decision-Making Skills.pptx - Argosy University B6021 Marketing Planning and Strategy Terry N Cerami M4:A2 Apply Decision-Making

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Argosy University B6021 - Marketing Planning and Strategy Terry N. Cerami M4:A2 – Apply Decision-Making Skills July 5, 2017 Suzanne Werden
AGENDA Payback Method 2 Internal Rate of Return (IRR) 3 Techniques / Principles of Capital Budgeting 1 Net Present Value (NPV) 4 Old or New Equipment Analysis 5 Total Cost Approach 6 Data Analysis 7
Techniques / Principles of Capital Budgeting “Every decision involves a choice between at least two alternatives. Only those costs and benefits that differ between alternatives are relevant in a decision. All other costs and benefits can and should be ignored as irrelevant. Using the capital budgeting techniques we help us make sound decisions.” (Galbreath, 2014) CAPITAL BUDGETING TECHNIQUES PRINCIPLES OF CAPITAL BUDGETING Any decision that involves a cash outlay now in order to obtain a future return is a capital budgeting decision. typical capital budgeting decisions include: Cost reduction decisions. should new equipment be purchased to reduce costs? Expansion decisions. should a new plant, warehouse, or other facility be acquired to increase capacity and sales? Equipment selection decisions. which of several available machines should be purchased? Lease or buy decisions. should new equipment be leased or purchased? Equipment replacement decisions. should old equipment be replaced now or later ? Payback Method Internal Rate of Return Method Net Present Value
Payback Method The

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