Category Archive for: Capital Budgeting


We appreciate having the opportunity of addressing you through this text. It is indeed a privilege to share our views of accounting and business with so many students. The writing of this text has taught us much. All of us have had to challenge, research, verify. and rethink much of what we thought we already…

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We now have discussed three methods of evaluating the financial aspects ‘of capital investment opportunities. The financial consequences of capital investments are relevant even if the business has )little choice but to make the expenditure.You probably notice how. much income taxes complicated our analysis of decisions about replacing’ assets. Income taxes do complicate business decisions-and…

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cash flow analysis purchase

Based on our cash flow analysis, purchase of the vending machines appears to be an acceptable proposal. However there are numerous non financial issues that might be considered before making a decision based purely on the numbers For instance, all of the revenue and expense estimates used in determining these financial measures were supplied by…

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Discounting Future Cash,Flows

As explained in earlier chapters, the present value of a future cash flow is the amount that a knowledgeable investor would pay today for the right to receive that future amount. Arriving at a present value figure depends on (1) the amount of the future cash flow, (2) the length of time that the investor…

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One of the greatest challenges managers face is making capital investment decisions. The term capital investment refers broadly to large expenditures made to purchase plant assets, develop new product lines, or acquire subsidiary companies. Such decisions commit financial resources for large periods of time and are difficult, if not impossible, to reverse once the funds are…

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