Discuss two pros and two cons cons of a business applying different capital budgeting 3 page paper

Jun 21st, 2015
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Discuss two pros and two cons cons of a business applying different capital budgeting techniques when it is faced with making wealth-maximizing decisions around investing corporate funds.Provide one example that illustrates the potential consequences of a business deciding to apply a single technique to all corporate investment decisions.Identify the most efficient capital structures for both a manufacturing company and a software development firm. Provide a rationale for your response.

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1- Companies employ different capital budgeting techniques to distribute resources for short-term and long-term business plans. For instance, if a company would like to acquire another business it will evaluate whether its decision is worth keeping or not. This company will evaluate the investments under different capital budgeting methods, the payback method and internal rate of return method. The payback method needed less input and used for speedy evaluation of small investments, and it is normally easier to calculate compared to other budgeting capital budgeting methods. But it ignores the time value of money which misrepresents the true value of each cash flow. It only considers those cash flows that you recover up until your initial investment and fail to comprise those you might collect in succeeding years. This drawback might cause you to forward an investment that produces s

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