L_14_ - Lecture Outline Lecture 14 Project Analysis and Evaluation Lecture Organization Cost Structure Break-Even Analysis Capital Budgeting

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Lecture Outline Lecture 14 Project Analysis and Evaluation Lecture Organization Cost Structure Break-Even Analysis
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Capital Budgeting Questions Projected versus Actual Cash Flows
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Capital Budgeting Questions Forecasting Risk Forecasting risk In order to develop reliable cash flow estimates for the projects we have to understand
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Cost Analysis Why Cost Analysis of the Project is Important? Total Costs of production depend upon __ The quantity of product sold____
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Cost Analysis Fixed and Variable Costs Variable costs ( VC ) —costs that change as the volume of sales changes (direct labor and materials, for example). variable costs = Variable Cost v are also called the marginal cost Fixed costs ( FC ) —costs that are constant over a period regardless of the level of sales. Total costs, ( TC ) —sum of fixed costs (FC) and variable costs TC = Average cost (AC) is total cost divided by output: AC =
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Average cost versus marginal cost Example:
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This note was uploaded on 06/22/2011 for the course FINA 365 taught by Professor Koch during the Spring '08 term at South Carolina.

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L_14_ - Lecture Outline Lecture 14 Project Analysis and Evaluation Lecture Organization Cost Structure Break-Even Analysis Capital Budgeting

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