ACCT 102 Lecture Notes Chapter 24 SPR 2010

ACCT 102 Lecture Notes Chapter 24 SPR 2010 - ACCT 102...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
ACCT 102 – Chapter 24 Capital Budgeting and Investment Analysis Schmidt The major goal of this chapter is to be familiar with and be able to implement four capital investment analysis techniques. Capital budgeting is a bit more challenging than other types of management decisions, because the impact involves longer term predictions and estimates that can impact the company for many years to come. Capital budgeting and investment analysis can take one of two directions: 1. Non-present value methods that do not consider the time value of money 2. Present value methods that do consider the time value of money See last page for a summary of the advantages and disadvantages of these methods. NON PRESENT VALUE METHODS – These DO NOT consider the time value of money Cash Payback Method This represents the expected time period to recover the initial amount invested. The shorter the recovery period, the better the investment is because you can now use your cash for other purposes. You must compute the expected cash flows over the life of the product. Non-cash expenses (like depreciation and accruals and deferrals) are not considered and therefore are backed out. Payback Period
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/08/2012 for the course ACCT 102 taught by Professor D.schmidt during the Winter '12 term at Cerritos College.

Page1 / 4

ACCT 102 Lecture Notes Chapter 24 SPR 2010 - ACCT 102...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online