Qct 7

Capital planning and budgeting is a very vital piece in the Public Budgeting System process. It is an essential implement in the financial management practice and is effective in both public and private organizations. It is the method which consists of the determination and the evaluation of the investments and the possible expenses by an organization. As explicate by Lee, Johnson, & Joyce (2008), capital budgets help in determining how much of each form of investment is needed, and it supports an organization in assessing the available revenue which includes loans is required to finance those investments (p. 475). Capital budgeting is a central part of the universal

After carefully reviewing the income statement, balances sheet and cash flow it seems that the company has a negative cash flow for 1998, so even before thinking about obtaining internal and external resources for long term investment, the company must assure resources for their own working capital.

The approximate probability of a value occurring that is greater than one standard deviation from the mean is approximately (assuming a normal distribution)

There are three principal reasons for imposing a capital rationing constraint. First, the management may feel that market conditions are temporarily adverse. The second reason is a manpower shortage, that is, a shortage of qualified managers to direct new projects. The final reason involves intangible considerations. Whether or not this is a rational move depends upon the extent of the rationing. If it is minor and non-continuing,

Capital budgeting is the process in which a business determines whether projects such as building a new plant or investing in a long-term venture are worth pursuing. Oftentimes, a prospective project's lifetime cash inflows and outflows are assessed in order to determine whether the returns generated meet a sufficient target benchmark. Whereas capital rationing is the act of placing restrictions on the amount of new investments or projects undertaken by a company. This is accomplished by imposing a higher cost of capital for investment consideration or by setting a ceiling on the specific sections of the budget.

should be the cost of capital and would like to determine it. You will assist in the process of

stock and perpetual debt; its stock is worth $125,000, and the interest rate on its debt is

Financing requirements of the company can be determined by calculating the cash requirements of the company by adding the working capital needs and capital expenditure needs of the company. Working capital needs can be calculated by subtracting current liabilities from current assets of the company. Current assets of the company will remain significantly lower than current liabilities for next three years. Working capital needs of the company come out to be $17.523 million, $21,028 million and $21,028 million for years 2010, 2011 and 2012. Capital expenditures of the company will remain at $0.9 million for all three years. Adding the values of working capital needs and capital expenditure needs for all years and by subtracting these values from net income, we can calculate the external financing required by the company to meet the cash needs for next three years. As shown in calculations in excel sheet, external financing requirements for the company come out to be $15.231 million for 2010 and $18.091 million for 2011 and 2012 respectively.

The cost structure of the company was 100% equity, owned solely by Mr. Case. The capital budget was the leftover earnings generated from internal operations minus the amount Mr. Case wished to withdrawal as income (dividends) for the

UEFA League final tickets are the most prestige tickets in the world. After doing a sample of 240 punters who have premier seats for the UEFA League Final match, it was determine that many people are paying more than the face value of $1,100, but they are not paying more than $1,500.

Students participating in a drug education program are given a drug awareness test at the beginning of the program.  The mean score for the population of 1,231 students is 61 with a standard deviation of 12.  As program director, you're curious as to how parents of the students perform on a drug awareness test and whether or not they are significantly different from the students.  Selecting a random sample of 50 parents, you administer the test and discover a mean score of 56.

On the basis of this information, what is the company’s optimal capital structure, and what is the firm’s cost of capital at this optimal capital structure?

The financials provided estimated annual capital expenditure to be approximately the value of annual depreciation of around $1.5m. Based on PE internal financial forecast, internal funding are sufficient to fund additional unbudgeted capex

Capital budgeting is the most important management tool that enables managers of the organization to select the investment option that yields comprehensive cash flows and rate of return. For managers availability of capital whether in form of debt or equity is very limited and thus it become imperative for them to invest their limited and most important resource in perfect option that could prove to beneficial for the organization in the long run (Hickman et al, 2013). However, while using capital budgeting tool managers must understand its quantitative and qualitative considerations that are discussed below.

The total amount of capital required is equal to: 1046.45 × 8% = $83.716 million.