HST4015.dotx - Hong Kong Institute of Vocational...

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Hong Kong Institute of Vocational Education (Chai Wan) Department of Hotel, Service and Tourism Studies HST4015 Hospitality Accounting and Finance CA – ASSIGNMENT Programmer Code:HT114002 / 2C Programmer Title: Higher Diploma in Tourism and MICE Lecturer: Mr Lau, Leo Student Name and Student Number: CHAN Ho Wai 170164951 CHAN Sau Yin 170256427 HUNG Kit Yee 170678857 LEUNG Chor Wai 170062079 SETO Ka Wing Kathy 170046909 TAM Hoi Yan 170218484 Words Count: 1659 Summit date: 7 December 2018 1 HST4015 Hospitality Accounting and Finance
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Content Page 1. ....................................................................................................................................... 3 2. ....................................................................................................................................... 3 3a. ..................................................................................................................................... 3 3b. ..................................................................................................................................... 3 3c. ...................................................................................................................................... 4 3d. ..................................................................................................................................... 4 4a. ..................................................................................................................................... 4 4b. ..................................................................................................................................... 5 4c. ...................................................................................................................................... 5 5a. ..................................................................................................................................... 6 5b. ..................................................................................................................................... 7 5c. ...................................................................................................................................... 8 5d. ..................................................................................................................................... 8 6a. ..................................................................................................................................... 8 6b. ..................................................................................................................................... 8 7a. ..................................................................................................................................... 9 7b. ..................................................................................................................................... 9 2 HST4015 Hospitality Accounting and Finance
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1. Capital budgeting is the procedure of examining additions fixed assets. Because fixed asset investment decisions chart a company's course for the future, it is important. Besides, the business firm’s capital budgeting process is the same with the decision process used by individuals’ investment decisions. 2. Projects are independent if the cash flows of one are not affected by the other project. Alternatively, two projects are mutually exclusive if one project affect the cash flows of the other in bad way. Projects in normal cash flows have outflows only in the first year and then only have inflows in the coming years. Projects in non-normal cash flows have one or more outflows after the inflow the first year. 3a. The payback period is the expected length of time to recover the project's cost. Project M Year1 10000 +Year2 60000 70000 Short of $30000 30000 ÷ 80000 =0.375 Hence, payback =2 + 0.375 =2.375 years . Project P Year1 70000 70000 Short of $30000 30000 ÷ 50000 =0.6 Hence, payback =1 + 0.6 =1.6years . 3b. Payback express a type of "breakeven" analysis: the payback period shows us when the project will break even in a cash flow significance. With an essential payback of 2 years, 3 HST4015 Hospitality Accounting and Finance
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Projects P is acceptable, whereas Projects M is not. If the two projects are independent or mutually excellent makes no difference in this case. 3c. The main disadvantages of payback is ignores all cash flows occurring after the payback period and ignores the time value of money.
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