Georgia State University Finance Capital Budgeting Essay

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Vapybhqf

Economics

Georgia State University

Description

Choose three project valuation methods, and write an essay that explains each of the methods. Specifically, your essay should cover the following topics:

Include an introduction that explains the overall function of valuation methods in capital budgeting and why capital budgeting is so important.

Explain the benefits and drawbacks of each valuation method, and describe whether the method is more beneficial in analyzing for-profit or nonprofit organizations.

For each valuation method, give a scenario where the method chosen would be beneficial in making a decision between different projects. If additional valuation methods would be beneficial in making a decision between the projects, explain why.

Conclude with an analysis of the effects of inflation and healthcare trends and how these should be factored into capital budgeting decisions.


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Explanation & Answer

View attached explanation and answer. Let me know if you have any questions.

Outline – Capital budgeting
1. Introduction – page 2
Capital budgeting is the decision-making process of the long-term goals of a firm. It involves
making decisions on what long terms assets to invest in, considering the cash flows of the
company
2. Payback period – Page 2
Payback is the primary method of accounting that estimates the number of years taken to repay
the original cost of the investment.
3. NPV – page 3
NPV is a valuation method that involves discounting future cash flows at a specified interest rate.
4. IRR – page 3
IRR is the discount rate used to make the NPV of cash flows zero.
5. Conclusion – page 4
Capital budgeting is an essential aspect of a business and key to achieving the long-term goals of
a firm
6. References – page 5


Running head: CAPITAL BUDGETING

CAPITAL BUDGETING
Name:
Institution:
Date:

2
CAPITAL BUDGETING
Introduction
Capital budgeting involves making investment decisions on long term assets. It is the decisionmaking process of acquiring assets that will have future gains for the firm. Capital budgeting
focuses on cash flo...


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