There have been times that business executives use the capital budgeting process in unethical ways. Discuss the capital budgeting process used by personnel managers, research and development staffs and advertising executives. Which of these would most likely be dishonest and unethical in preparing capital budgets?
Q: Give 10 importances of finance research
A: Finance research is the systematic study and analysis of financial concepts, theories, and data to…
Q: Give typing answer with explanation and conclusion you want to borrow $71,400 from your local bank…
A: The idea of the time value of money (TVM) holds that a quantity of currency is valuable currently…
Q: The monthly payments on a 20-year loan of $15,000 at 5.2% interest are $100.66. (a) What is the…
A: Present value of annuity is the current value of the future payments that are calculated using the…
Q: Bramble Corporation had net credit sales of $14100000 and cost of goods sold of $9370000 for the…
A: Here, Net Credit Sales is $14100000 Cost of Goods Sold is $9370000 Average Inventory is $1171250
Q: ANNUITY PAYMENT AND EAR you want to buy a car, and a local bank will lend you $20,000. The loan…
A: When we buy large ticket items like a house or a car we often take a loan to finance such purchases.…
Q: A3-2 A project has costs and incomes as shown on the diagram in thousands of dollars. C = Capital,…
A: C = Capital Cost I = Income OC = Operating Cost L = Salvage Value Time period is 6 years and minimum…
Q: Chik's Chickens has accounts receivable of $5,533. Sales for the year were $9,000. What is its…
A: Average collection period = Accounts receivable * 365 / Net sales
Q: A Bank has the following balance sheet (in millions), with the risk weights in parentheses. In…
A: The assets on the balance sheet are assigned a weight on the basis associated with the asset. Like…
Q: What is the value now of an annuity that pays $2,000 at the end of each of the next 50 years…
A: Value of annuity is that amount which is invested by the investor and against which investor will…
Q: 16. What is the total variance of the following portfolio including 2 assets invested in the ratio…
A: Formula to be used: Portfolio variance=(WA2 x σ2A)+(WB2 x σ2B)+ (2 x WA x σA x WB x σB x r) Data…
Q: Find the savings plan balance after 18 months with an APR of 9% and monthly payments of $150. ...…
A: Future value is the estimated value of current assets that is discounted at an assumed rate of…
Q: According to this morning's The National Post, you can exchange $1 for $0.77 U.S. in three months.…
A: The exchange rates can fluctuate and are influenced by various factors such as economic conditions,…
Q: Kim received a credit card statement that has a new balance of $245.98 and a minimum payment of…
A: The interest on the credit card refers to the amount that the issuing company charges on the use of…
Q: Suppose a ten-year, $1,000 bond with an 8.4% coupon rate and semiannual coupons is trading for…
A: Bonds refer to the financial instrument issued for providing funds to the borrower by the…
Q: Mr. Jonas invested a total of &100,000 in three mutual funds: a growth fund that lost 8%, a balanced…
A: It is a case where investments in each type of fund are required to be calculated so that the…
Q: Paper plates are shipped in boxes. Each box has 10 bags of plates. Each bag has 10 plates. Draw…
A: Each box having 10 bags and every bags having 10 plates. We required 180 paper plates so Each box…
Q: An investor has $1000 initial wealth for investment and he borrows another $1000 at the risk free…
A: Beta coefficient is a measure of systematic risk of an individual security or portfolio. It measures…
Q: Sam Long anticipates he will need approximately $225,100 in 10 years to cover his 3-year-old…
A: we need to discount future value into present value by applying the discount factor given in table…
Q: A mutual fund sold $158 million of assets during the year and purchased $132 million in assets. If…
A: Total assets sold=$158 million Total assets purchased=$132 million Average daily balance=$496…
Q: What's the present value of $1,850 discounted back 5 years if the appropriate interest rate is 6%,…
A: Data given: Amount=$1850 n=5 years rate=6% compounded monthly Required : Present value
Q: Explain the following Motives for repurchasing shares: -Signal that the stock is undervalued.…
A: Share repurchasing, also known as share buybacks or stock buybacks, refers to the practice of a…
Q: Theoretical foundation of risk management in the banking sector from a customer's perspective
A: A customer's perspective regarding risk management in the banks primarily focused on the safety and…
Q: You bought a Tesla Model 3 for $37205 and the auto loan is 60-month fixed rate loan with interest…
A: The idea of the time value of money (TVM) holds that a quantity of currency is valued currently more…
Q: Inc. is ad ing Mexico. The Mexican subsidiary manufactures toys for kids which will be sold to…
A: If there is a constant growth rate from year 4 onwards, then the terminal value with the constant…
Q: WellyWeta workshop is considering buying a machine that costs $545,000. The machine will be…
A: When buying the machine, there is tax savings on the interest and depreciation whereas when leasing…
Q: XYZ Co is considering to purchase equipment that has 4 years of life and requires an initial capital…
A: Npv is a capital budgeting techniques. Which help in decision making on the basis of future cash…
Q: Your firm is contemplating the purchase of a new $535,000 computer-based order entry system. The…
A: Net present value refers to teh method of capital budgeting used for estimating the viability of the…
Q: a. Calculate the change in retur Security A's change in return w Data table Security A (Click on the…
A: Security's Change in return = Change in Market Return * Beta of the security
Q: Imagine that a friend tells you that you should not rush to pay off your mortgage early because you…
A: Introduction: Mortgage: It is a type of amortized loan by which the debt is repaid in regular…
Q: CVM Inc bought a machine for $22,000. Its estimated life is 4 years with a residual value of $1,000.…
A: Book Value = P - ( P - S)/Lt * t P = Initial Value S = Salvage value Lt = Lifetime of Asset t =…
Q: Determinants of Interest Rates The real risk-free rate is 2%. Inflation is expected to be 3% this…
A: To find the nominal interest on the 7 year Treasury security, real risk free rate, average inflation…
Q: Compute the total and annual returns on the described investment. Six years after buying 200 shares…
A: Total Return = [ Sale value - Purchase value ] / Purchase value Annual Return = [ Total return *…
Q: uppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The…
A: A rate through which individuals or companies convert their domestic currency with the other…
Q: Suppose you deposited $4,000 in a savings account earning 2.1% interest compounding daily. How long…
A: Future value refers to the amount of current assets at some future date affected by interest rates,…
Q: The residual dividend policy approach to dividend policy is based on the theory that a firm’s…
A: Data given: Net income=$240,000,000 Capital budget=$85,000,000 Debt=70% Equity=30% Required:…
Q: Country Bank has $350,000 of 6% debenture bonds outstanding. The bonds were issued at 106 in 2021…
A: Debenture issued at premium of 106 Total amount = $350000 Interest rate = 6% Maturity = 20 years
Q: You expect to receive $8,000 at the end of each year for the next ten years, followed by a single…
A: Present value is the estimation of the current value of future cash value which is likely to be…
Q: If Megan's tuition, fees, and expenditures for books this year total $19,000, what will they be…
A: Please note that under answering guidelines only 1 question can be solved. Since multiple questions…
Q: Required information A potential investment has a cost of $425,000 and a useful life of 5 years.…
A: Annual cash inflows are the cash inflows incurred during the year for the purpose of calculating the…
Q: In early 2013, Jennifer (Jen) Liu and Larry Mestas founded Jen and Larry’s Frozen Yogurt Company,…
A: Introduction: Return on assets measures the profitability of a firm in relation to its total…
Q: Some investors use the Sharpe ratio as a way of comparing the benefits of owning shares of stock in…
A: Sharpe ratio is the excess return earned per unit of risk. It is calculated as: Sharpe…
Q: Sow Tire, Inc. has sales of $1,450,000 and cost of goods sold of $980,000. The firm had a beginning…
A: Sales = $1450000 COGS = $980000 Beginning Inventory = $97000 The formula to compute days sales in…
Q: Stock valuation is necessary in making a good investment decision. This helps in the identification…
A: Stock valuation is the process of determining the intrinsic value of a company's stock or shares. It…
Q: Flowers by Irene Inc. is a small company and is considering a project that will require $700,000 in…
A: Return on equity is the financial ratio to determine the financial performance of the company. ROE =…
Q: Suppose that you just bought a four-year $1,000 coupon bond with a coupon rate of 5.7% when the…
A: A bond is a kind of debt security issued by the government and private companies for raising funds…
Q: 5. Assume that the price of a price of $40 is $2.75. If the underlying stock price is $38, the…
A: Options gives the opportunity to buy or sell stocks on expiration by paying small premium but there…
Q: The table below contains data on Fincorp Incorporated. The balance sheet items correspond to values…
A: The difference between a company's or project's net working capital at two separate points in time…
Q: 3. A. Cash Collection Budgeted sales for the third quarter of the year for Brown Company are as…
A: So the cash payment is always calculated in order to understand the working capital cycle and it is…
Q: Bramble Corporation had net credit sales of $14100000 and cost of goods sold of $9370000 for the…
A: Inventory turn over ratio show how much time inventory has been rolled over during the year and it…
Q: Use the savings plan formula to answer the following question. Your goal is to create a college fund…
A: The time value of money is beneficial to shareholders as it emphasizes the importance of receiving…
Step by step
Solved in 3 steps
- Using accrual accounting to evaluate the performance of a manager may create conflicts with the use of DCF methods for capital budgeting. Frequently, the decision made using a DCF method will not report good “operating income” results in the project’s early years under accrual accounting. For this reason, managers are tempted to not use DCF methods even though the decisions based on them would be in the best interests of the company as a whole over the long run. True False: Using accrual accounting to evaluate the performance of a manager cannot create conflicts with the use of DCF methods for capital budgeting. False: Frequently, the decision made using a DCF method will report good “operating income” results in the project’s early years under accrual accounting. False: managers consistently use DCF methods even though the decisions based on them would be in the worst interests of the company as a whole over the long run. B, C, and DThe budgeting process is an essential component of management control systems, as it provides a system of planning, coordination and control for management. It is often an arduous process, however, and often strikes dread in the hearts of those involved in budget preparation.In the public sector, the budgeting process can be even more difficult, since the objectives of the organization are more difficult to define in a quantifiable way than the objectives of a private company. For example, a private company's objectives may be to maximize profit. The meeting of this objective can then be set out in the budget by aiming for a percentage increase in sales and perhaps the cutting of various costs. If, on the other hand, you are budgeting for a public sector organization such as a hospital, then the objectives may be largely qualitative, such as ensuring that all outpatients are given an appointment within eight weeks of being referred to the hospital. This is difficult to define in a…Budgeting is essential to businesses, but it is not that simple to implement. What are some challenges and weaknesses that a firm may find in the budgeting process?
- Explain the behavioral issues involved incapital budgeting and identify how companiestry to control the capital budgeting process.Capital budgeting can be affected by factors such as exchange rate risk, political risk, transfer pricing, and strategic risk. Select a mid- or large-sized business organization and explain how each of these factors can affect its capital budgeting. Which factor poses the greatest threat to your selected organization and why? What measures can stakeholders take to reduce adverse impacts of these factors?Suppose that the vice president of sales is a particularly pessimistic individual. If you were in charge of developing the master budget, how, if at all, would you be influenced by this knowledge?
- How are conflicts between the shareholders and the management created? Which of the following is most accurate? a. They have either different political or religious beliefs. b. They have different views on how to manage people. The shareholders want a more liberal approach while the management wants micromanaging. c. The management would want to undertake higher risk projects in anticipation of higher returns because management compensation and bonuses are partly tied to financial performance, while shareholders may want to limit risks and invest instead in projects with lower risk. d. None of the choices are correct.why would it be wise for a financial manager to learn advanced capital budgeting techniques?Which one of the following is not considered to be a benefit of participative budgeting? When managers set the final targets for the budget, top management need not be concerned with the overall profitability of current operations. Managers are more motivated to reach the budget goals because they participated in setting them. Individuals at all organizational levels are recognized as being part of the team; this results in greater support of the organization. The budget estimates are prepared by those in direct contact with various activities.
- In this comprehensive paper, assume you are working with the accounting department in your organization to make a decision regarding a capital investment you feel is needed to improve productivity in your department. The organization has limited resources and you are trying to prove why your department needs the resources more than other departments in the company. Provide an example of a possible capital investment to use in your argument to management that will be used throughout your paper. Give some examples of the types of non-financial factors that managers would consider in this decision that are more important in today's capital investment decisions than they were in the past.For firms that have debt on their balance sheets, interest expense is commonly seen as an expense on the firm's income statement. In capital budgeting, however, we ignore interest expense. Why? Group of answer choices A) Because the cost of debt is already included in the WACC, and including interest expense in the calculation of cash flows would then be "double counting" it. B) Capital budgeting is done from the perspective of the common stockholders, so it ignores interest expense (Wrong Choice) C) Like depreciation, interest expense is a "non-cash" expense D) Because firms ignore the pleas of banks and bondholders to pay their interest. This is why Silicon Valley Bank failed.you are working with the accounting department in your organization to make a decision regarding a capital investment you feel is needed to improve productivity in your department. The organization has limited resources and you are trying to prove why your department needs the resources more than other departments in the company. Provide an example of a possible capital investment to use in your argument to management.