It is important to study the examples and videos regarding the calculation of net present value (NPV). Present values can be calculated by using the present value tables in the textbook. You may find that using a financial calculator or Microsoft Excel is beneficial in calculating present value.
Make sure to read all the assigned readings and complete the Check Your Understanding activity.
Discussions are an effective way to learn more insights regarding the capital budgeting process and share those insights with your classmates. There is a discussion question this week regarding what factors should be considered in capital budgeting projects.
The controller at Ranyah Corporation analyzed a proposed equipment purchase for the firm and decided that the investment met all the firm’s criteria regarding payback, net present value, and internal rate of return. Notwithstanding the positive results, top management decided to reject purchase of the machine. Elaborate on why a firm might reject a project even though it satisfies all the capital budgeting analyses.
Embed course material concepts, principles, and theories (requires supporting citations) along with at least one scholarly, peer-reviewed reference in supporting your answer.
readings required:
- Nikias, A. D. (2019). An experimental examination of the effects of information control on budget reporting with relative project evaluation. Journal of Management Accounting Research, 31(2), 177–196.
- Chapter 12 in Managerial Accounting (PowerPoint attached)
- Sarwary, Z. (2019). Capital budgeting techniques in SMEs: A literature review. Journal of Accounting & Finance (2158-3625), 19(3), 97–114.
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