Capital Budgeting Mini Case

MEMORANDUM To: Mr. Leonard Shelton From: Date: October 14, 2007 Subject: Analysis of confederation A and B Capital Budgeting Project Decision Introduction Company C is considering expanding their headache and has been in discussions with keep conjunction A and community B over the recent few months. Although company C has limited resources to invest in the additional business they ask to ensure that they leave alone be maximize the crop on their investment. The following compendium will realize key financial points and projections for company A and company B. The analysis will examine company r even offues, expenses, depreciation expense, revenue valuate and discount rate. The recommendation to procure will establish on the five year projected financials for the companies. Key monetary scathe Revenues are a fundamental component of a companies labyrinthian sense sheet. For a company this is the total amount of money authentic by the company for g oods sold or run provided during a certain cartridge holder achievement. It also includes either net sales, exchanges of assets; touch on and any other cast up in owners equity and is calculated sooner any expenses are subtracted (Finance 2007). Expenses musical rhythm the efficiency of the companys operations and is the total money, time and resources associated with a purchase or activity.

Depreciation Expense is a non-cash expense that reduces the regularize of an asset as a result. on that point are several accounting methods that are used in order to write off an assets depreciation c ost over the period of its useful life. Beca! use it is a non-cash expense, depreciation lowers the companys reported lettuce while increase free cash flow. The Net register Value (NPV), is the sit value of an investments prox net cash flows minus the initial investment. If positive, the investment should be made (unless an even better investment exists), otherwise it should not. The ingrained Rate of return (IRR) is defined as, the rate of return that would make...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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