Question

In: Finance

Do you think it is possible and or wise for a company (or investor) to use...

Do you think it is possible and or wise for a company (or investor) to use different methods based on a company's position in their own life cycle? Is it fluid, meaning it can go back and forth depending on a company's position? explain

Solutions

Expert Solution

With reference to budgeting decision, yes it would be wise to use different budgeting decsision based on a company project and the position in their own life cycle. In real world most companies use the net present value amd Internal rate of return approach to deciding capital budget decision, but if you look little closely these methods are used by corporation whose capital size is substantial and cash flow of these projects is spread over a period of time. If you look at small business or a sole proprietor, they are more concerned with how quickly they can recover the cost of the project or their investment so they might consider using payback period. Also, Most company who take such large capex decision are either at mature or stable satge in their life cycle. Startup companies do not necessarily use NPV or IRR to determine the viability of a project.

It is possible to back and forth depending on the situation. It would be wise decision from the senior managemnt point of view if they did consider using different approach to value different projects keeping in mind the nature of the project, the stage in which their company is and the risk associated with the same.


Related Solutions

do you think that the company is wise to monitor employees in this matter? why or...
do you think that the company is wise to monitor employees in this matter? why or why not?
Considering the history of Great Britain and the U.S., do you think that it was wise...
Considering the history of Great Britain and the U.S., do you think that it was wise for Great Britain to serve as America's ally in the fight against terror? Base your response on your current knowledge of global affairs.
Businesses sometimes face so many changing variables and costs. Do you think it is wise to...
Businesses sometimes face so many changing variables and costs. Do you think it is wise to do a "best case, worst case, and most likely" scenario to see the full range of financial impact on a project or initiative? Why or why not?
Discuss the concept of risk and return. As a potential investor, where do you think you...
Discuss the concept of risk and return. As a potential investor, where do you think you fall on the conservative to aggressive spectrum, and how does that tie into risk and return?
Why do you think researchers use samples? Why do you think we also use null and...
Why do you think researchers use samples? Why do you think we also use null and alternative (research) hypotheses?
As an investor, do you think the "buy low" mindset applies to Brazil? If not, what...
As an investor, do you think the "buy low" mindset applies to Brazil? If not, what changes would you like to see before making any investments in the country?
What ways do you think companies use customer-generated data do you think other companies use to...
What ways do you think companies use customer-generated data do you think other companies use to enhance decision-making? What are some of the ethical considerations that should be considered when using customer-generated data? Provide specific examples for each.
How do you think investor activism can affect the companies? Why do people believe it is...
How do you think investor activism can affect the companies? Why do people believe it is a CSR concern? Discuss with the example of famous companies.
Do you think it is possible for depositors to discipline bank managers who are tempted to...
Do you think it is possible for depositors to discipline bank managers who are tempted to take unsound risks with their funds? Why or why not?
Many great leaders are thought of as good motivators. Do you think it is possible to...
Many great leaders are thought of as good motivators. Do you think it is possible to be a great leader without being a great motivator? Why or why not?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT