Day 26-Final Exam Review-12.7.11

Day 26-Final Exam Review-12.7.11 - Business Management 201...

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Unformatted text preview: Business Management 201 Day 26 Final Exam Review December 7, 2011 Day 26 Agenda 1) Final Exam Review Sessions: Thursday, December 8 from 5:00 pm-7:00 pm in 3108 JKB (Professor Larson) Friday, Dec 9 from 11:00 am-1:00 pm in 151 TNRB (Devin) Saturday, Dec 10 from 9:00 am-11:00 pm in 151 TNRB (Rebecca) 1) Final Exam in JSB: Monday, December 12 from 8:15 am-9:15 am Tuesday, December 13 from 8:15 am-9:15 am Wednesday, December 14 from 8:15 am-9:15 am 1) ALL Late Work Due TODAY by 11:59 PM 2) Final Grades Posted to Transcript by 12/19 3) Please Complete the BYU Course Evaluation 4) Final Exam Review Final Exam Final Exam Review Review Final Exam Details 0 Questions [2.5 points each] ALL Multiple Choice o True/False Questions o Time Limit [Plan about the same time or a little longer than for the Midterm exam] SB Auditorium [8:15 am-9:15 am Monday-Wednesday] inancial Calculator [NO graphing calculators] Capital Capital Budgeting Budgeting Capital Budgeting Overview Beginning Initial Outlay : Equipment Cost Shipping/Installation Maintenance Sales Tax Gain/Loss on Sale of Old Equipment NWC Annual Operating Cash Flow Formula: OCF = (Sales – Costs)*(1-Tax Rate) + (Depreciation*Tax Rate) +/- Change in NWC Middle Annual Cash Flows [Use Formula] Gain/Loss on Sale of Old Equipment Potential Missed Old Depreciation Change in NWC Ending Annual Cash Flow ALL Terminal Cash Flows : Gain/Loss on Sale of Old Equipment Gain/Loss on Sale of New Equipment Return of NWC Fixed Costs Variable Costs Annual Depreciation Tax Shield = Dep*Tax Rate Only Applies if NWC changes with sales. Capitalize ONLY expenses related to new project. ALL CF received in last year are called “Terminal Cash Flows.” Relevant Cash Flows (CFs) Incremental CFs: additional cash in minus additional cash out. Capital budgeting focuses on the INCREMENTAL cash flows! 1) Incidental CFs—Consider • Directly and indirectly related; “cannibalization” 2) Sunk Costs—Ignore • Do NOT consider; irrelevant to decision; irretrievable 3) Opportunity Costs—Consider • MUST consider; relevant to decision; finite capacity Capital Budgeting: A Three Step Process 1) Evaluate Cash Flows 2) Evaluate Risk 3) Make Decision (i.e. ACCEPT or REJECT) Capital Budgeting Capital Budgeting Example #1: Example #1: Beckingham Beads Beckingham Beads Capital Budgeting Example #1 • Beckingham Beads is an American company that produces beads for designer gowns and premium jewelry. Based on the results of a $25,000 market study, Beckingham Beads is considering selling overseas and increasing revenues by an estimated $550,000 per year. considering selling overseas and increasing revenues by an estimated $550,000 per year....
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This note was uploaded on 01/04/2012 for the course BUSM 201 taught by Professor Jennlarson during the Fall '11 term at BYU.

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Day 26-Final Exam Review-12.7.11 - Business Management 201...

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