Question
Capital budgeting and the post-audit process In January 2008, Commonwealth Biofuels LLC opened a production facility that is capable of producing 2 million gallons per
Capital budgeting and the post-audit process
In January 2008, Commonwealth Biofuels LLC opened a production facility that is capable of producing 2 million gallons per year of ethanol from cellulosic material. The company wants to expand and open three more ethanol production facilities within the next two years. The venture capital firm that financed the companys first project has asked the companys management team to perform a post-audit on the initial project. The venture capital firm will use the information from the post-audit to help evaluate the companys plans for expansion. Which of the following would be part of the post-audit? Check all that apply. Check all that apply.
In instances where the companys estimated costs were different from the actual costs, the management team will need to explain why these differences occurred.
The management team will need to compare the projected selling price of ethanol to the actual selling price of ethanol.
The management team will need to determine if it wants to use straight-line or accelerated depreciation to depreciate the property, plant, and equipment used in the initial project.
When a firm is forced to employ capital rationing, it generally means that the firm has ----------------- positive NPV projects than it can finance.
The----------------------- is a graph of marginal rates of return on investment at different levels of investment.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started