FINAL 11-05-09 - Decision Making Claudia Pelaez Colorado...

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Decision Making Claudia Pelaez Colorado Technical University Online ACC350-0904A-02: Managerial Accounting Practices. Instructor: Jacob Gordon November 3, 2009
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Introduction When a company decides to make new investments, they usually think about expansion, acquisition, and modernization of equipment. The investment decisions of an organization are generally known as the capital budgeting, or capital expenditure decisions. In this presentation I would be discussing the different two options that Claire’s is having in this moment. I would analyze which option will be the better for the wellbeing of the company.
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Capital Budgeting Capital budgeting is the investment decisions of a firm. Is a systematic approach to evaluating an investment in a capital asset. capital budgeting has following characteristics: The exchange of current funds for future benefits . The funds are invested in long-term assets. The future benefits will occur to the firm over a series of years.
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Assumption for Capital Budgeting Risk-adjusted cost of capital = 10% Tax rate = 40% Project life = 5 years Depreciation method = 5-year straight-line Calculation details are attached in the excel worksheet.
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Investment of a company Investment is the monetary value of the assets the organization gives up to acquire a long-term asset.
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This note was uploaded on 10/29/2011 for the course ACCOUNTING ac201 taught by Professor Schmidt during the Spring '11 term at Colorado Technical University.

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FINAL 11-05-09 - Decision Making Claudia Pelaez Colorado...

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