Assignment: Capital Budgeting

Module Overview

A business starts when an idea is put into action. However, before you start a new business, you should check the idea for feasibility and profitability. This means that you should study the market—what customers want and what the market has to offer. Market research will help you analyze whether your product, service, or process can fill a gap.

In the previous modules, you discussed some components involved in management's decision-making process. In this module, you will continue to discuss those concepts. One critical decision made among companies is to price a product or a service. Pricing a product or a service requires a balance to establish a price that covers all the associated costs. At the same time, the price should not be too high to deter consumers from purchasing. This module will introduce you to various costing modules that management can use to estimate or determine the cost of its product or service.

With few exceptions, businesses either grow or fail. If projects simply become bigger but do not change in character, the firm can grow financially with little growth in people. However, in most of the cases, growth comes from a combination of bigger projects and smaller projects—and these require more people. However, a company must demonstrate financial controls at every level of the organization—and the only way to do this is by sharing the discipline of financial decision making throughout the firm.

Module Readings

Complete the following readings early in the module:

• Module overview
• From your course textbook, The portable MBA in finance and accounting, 4th, read the following chapters:
  • Forecast and Budgeting
  • Cost Structure Analysis, Profit Planning, and Value Creation
  • Activity-Based Costing

Module Conclusion

An understanding of cost behavior is vital in developing pricing strategies. Making profit is the primary objective for any for-profit entity.

To make a product, the costs to produce a product or the costs to provide a service as well as the related administrative costs must be recovered when sold. Applying the costing methods and techniques discussed in this module will assist management in making such decisions. In addition, management must understand how each category of costs, such as direct costs vs. indirect costs or fixed costs vs. variable costs, behaves in order to make well-informed decisions about cost effectiveness and efficiency.

In this module's assignments, you will evaluate the considerations necessary to determine an appropriate business form for a new business. You will also evaluate the financial aspects of making decisions.

Assignment: Capital Budgeting

Capital budgeting is a tool used in business to determine the financial viability of a potential project. Net present value, internal rate of return, payback, discounted payback, and modified rate of return are some of the calculations used once businesses have a reliable cash flow budget for their project.

In this assignment, you will demonstrate your understanding of the necessary aspects of capital budgeting.

Tasks:

Respond to the following:

• What is capital budgeting and why is it important to business decisions?
• Discuss how the information should be organized in a capital budgeting process, and who will use the information for decision-making.
• What could go wrong with the capital budgeting process?
• Provide an example of a capital budgeting process from an online source and explain the salient points of this example to the class.

 In a minimum of 300-500 words, post your responses using critical thinking and analysis.  

 turned-in on time, Grading criteria followed All assignment qualifications addressed correctly, Grading Criteria followed, Include Question followed by the answer  Reference Page Included Cover page Included, Paragraphs  Indented,  Running-head included, main heading should be centered; all  new  paragraphs should be indented;  paper should be right ragged,   not right justified; references,  should always go on a standalone  page. abstracts are not usually indented; acronyms should be spelled out when using them  for  the first time, for example HR. references as listed are APA  standard.   When you  submit your papers through turnitin.com, your overall  similarity  index  score should not be exceedingly high, with   ten to  fifteen percent  being  the maximum,  Please make sure your APA  formatting of citations. I have provided the  APA resource cite for you. https://owl.english.purdue.edu/owl/resource/560/01, Please work on using literature within the span of the last 5 years,  keep in mind there should not be any one, two, or three sentence  paragraphs   Your response should be thorough and address all components of the discussion question in detail, include citations of all sources, where needed, according to the APA Style, and demonstrate accurate spelling, grammar, and punctuation.   

Submission Details:

• By Friday November 30, 2018, post your responses to this Discussions Area. Support your assumptions by citing the source material used for this discussion in APA format.
• While responding, share any real-world experiences in capital budgeting. Provide substantive comments by contributing new, relevant information or quotes from course readings, Web sites, or other sources; by building on the remarks or questions; or by sharing practical examples of key concepts from your experiences—professional or personal.

Do the following when responding:

• Read your responses.
• Provide substantive comments  by contributing new, relevant information from course readings, Web sites, or other sources; building on the remarks or questions; or sharing practical examples of key concepts from your professional or personal experiences. Respond to feedback to your own posting and provide feedback about their ideas.
• Make sure your writing is clear, concise, and organized; demonstrates ethical scholarship in accurate representation and attribution of sources; and displays accurate spelling, grammar, and punctuation.

Grading Criteria

Quality of initial posting, including fulfillment of assignment instructions

Reference to supporting readings and other materials

Language and grammar