Factors in Capital Budgeting Decisions

Imagine you are a representative of management in the companyKATE SPADE AND COMPANYand you must make a capital budgeting decision. The decision is to implement a new computer network system to decrease the time between customer order and delivery. The cost will be 10% of last year's profits. You are charged with describing the important considerations in the decision-making process to upper management. In your response, be sure to include the following:

• A description of the important factors, in addition to quantitative factors, that were considered when making this capital budgeting decision.
• An explanation of how these factors are significant to the company.
• A summary of how you will determine the criteria to rank capital budgeting decisions and whether some criteria are more important than others.
• A calculation of the proposed return on investment based on criteria you select and justification for that ROI.
• Develop a explanation supporting your recommendations.
• Tip: For help with reading an annual report access this handy guide from Money Chimp(Links to an external site.) (http://www.moneychimp.com/articles/financials/fundamentals.htm)
• Guided Response: Review several of your classmates' postings. Respond to at least two of your classmates by adding additional factors to consider in the decision-making process that they may have missed or would add positively to the results of the budgeting decision. Be sure to include evidence to support your position.