Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I have the questions in the attachment. There two seprate question. Please no copying. 1. Assume you are planning to start a new business that

I have the questions in the attachment. There two seprate question. Please no copying.

image text in transcribed 1. Assume you are planning to start a new business that will sell innovative consumer products via an online store. You will be pitching your idea to potential investors with the goal of securing funding. Your investors are very savvy and want to review a well thought out financial forecast. Using the examples provided in Chapter 6, construct a hypothetical 5 year Cash Flow estimate including depreciation and tax-related amounts. Be sure to show your detailed calculations and document at least five key assumptions. Also, explain why cash flows occurring at different intervals should be adjusted for a common date in order to allow for a proper comparison. 250 words 2. https://www.youtube.com/watch?v=TrKVj_wLgUc watch this first and then answer the question, Imagine the producers of this video ask you to appear in the video to offer two additional considerations in capital budgeting decisions. One consideration must be quantitative (numeric). The other must be qualitative (non-numeric). Write a script to describe capital budgeting considerations that you think are important for managers to consider. Your script should be 250 words. Question 1 Any series of cash flows that doesn't follow the definition of an annuity is counted to be an uneven cash flow .In this case, Cash flow occurring at different intervals should be adjusted for a common date because of time value of the money, they cannot be compared if they occur at different intervals. Hence it is utmost important that first you bring these cash flow at a common interval and then any comparison and analysis can be made. To elaborate further, consider the following example: The time value of concept is very important and cannot be ignored . For instance, If we have the option to receive $100 today or $100 after one year then $100 today value would be higher since Present Value(PV) of $100 to be received after 1 year would be less than $100 as on today. Let's say that discount rate is 10% then PV of $100 at different point of time is shown below for understanding purpose: Statement showing Cash flows Particulars Time PVF 10% Cash Flows - 1.00 Amount PV 100.00 100.00 Cash Flows 1.00 0.9091 100.00 90.91 Cash Flows 2.00 0.8264 100.00 82.64 Cash Flows 3.00 0.7513 100.00 75.13 Question 2 Hello. So today, we touched briefly upon the topic of capital budgeting and some techniques to include present dollar analysis. This is the process of planning long term investments of available capital funds. You'll want to go this route if you plan to be successful and grown in your organization. As a person within a management position, you must a lot of things into thought when it comes to making choices about capital budgeting. Within this consideration, you have the numeric and the non-numeric items within capital budget. Let's explore this as simple as possible. Let's think of numeric as quantity and non-numeric as qualitive. When you have information comprised of estimates for capital spending requirements The quantitative (numeric) is a part of capital budgeting is when we get together the information we needs in order to estimate funds for the capital spending needs. Looking and reviewing the financial statements that will be good for the longer term investments of the company or organization should also be added to this as well. The Net Present Value (NPV) is a quantitative process and we can use this by taking the present value of future cash flows minus the initial investment Hickman, Byrd, J & McPherson, M. (2013). The qualitative (non-numeric) is a planning portion to capital budgeting. We can gather the information such as talking to people and observations and looking at evaluating what is in the budget request and considers the needs and the best options. The difference of prospective in the both the quantitative and qualitative aspects of capital of budgeting are equally important

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Survey Of Economics, Principles, Applications, And Tools

Authors: Arthur O'Sullivan, Steven M. Sheffrin, Stephen J. Perez

5th Edition

0132556073, 978-0132556071

More Books

Students also viewed these Finance questions

Question

Describe specific developments that advanced cognitive psychology.

Answered: 1 week ago

Question

2. Find five metaphors for communication.

Answered: 1 week ago