Chapter 12 power point notes Braun2e

Chapter 12 power point notes Braun2e - ChapterTwelve...

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ACG 2071 - Spring 2011 1 Chapter Twelve Capital Investment  Decisions and the Time  Value of Money
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ACG 2071 - Spring 2011 2      What is Capital Budgeting  Planning and analytical techniques  utilized by managers in determining  whether to purchase capital assets  or other long-term company  investments.
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ACG 2071 - Spring 2011 3 Examples of Capital Assets  and Long-Term Investments Machinery and Equipment Buildings Manufacturing Facilities  New products New Business Segments .
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ACG 2071 - Spring 2011 4 Specific Methods Utilized to Analyze  Capital Budgeting Decisions (1)Payback Period    does   not  consider time  value of money (2)Accounting Rate of Return (ARR)  does   not  consider time value of money (3) Net Present Value (NPV) -    does  consider time value of money (4) Internal Rate of Return (IRR)  -  does   consider time value of money .
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ACG 2071 - Spring 2011 5 What is the focus of capital  budgeting? Except for ARR, the other methods focus on  expected  net cash inflows   from acquisition of  the asset.  Net Cash Inflows   are the difference between: - Cash Inflows or Savings  such as additional  revenues, cost reductions, etc.  - Cash Outflows  such as original investment  cash  outlay, ongoing cash payments, etc.    .
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Chapter 12 power point notes Braun2e - ChapterTwelve...

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