Question

In: Operations Management

I have three questions that I need assistance with: What is your interpretation of capital resources...

I have three questions that I need assistance with:

What is your interpretation of capital resources available in an organization?

What would you include in a capital request based on sound due diligence and feasibility?

What various financial justifications (break-even analysis, net present value, cost of capital, and internal rate of return) would you include and why?

I'm getting stuck in exactly how to answer these questions as I'm getting ready to work on my capital budget project. Any assistance would be greatly appreciated.

Solutions

Expert Solution

Capital resources which are available in organization are the productive assets like the inventory, equipment and the plant which are manmade and are used for income generation. There are basic four different kinds of capital resources like buildings, equipment, machinery and tools which are used for production in an organization. Capital resources should be the component of the process of manufacturing and required for production of products. Capital resources should be used for long time which varies as per life expectancy of resources and be manmade.

Based on sound due diligence and feasibility capital request should include minimum value of capital and maximum duration of contract. Legal constraints and environmental and societal sustainability should be maintained.

The break-even analysis determines what to sell, when to sell, helps to cover costs in business. The break-even analysis calculates the break-even point of one unit fixed costs, variable costs and revenue of sales.

Net present value is totalling of individual monthly or yearly net cash flows after discounted. High discount rates can lead to risky business and is not recommended. Internal rate of return is the interest rate which is used in the calculation of NPV and it causes the NPV to be zero. When IRR is greater than average investment opportunity rate the project permits the screen.

Cost of capital is opportunity cost of making a precise investment. The rate of return earned by placing same money in different investment with equal amount of risk is costs of capital.

Breakeven analysis, costs of capital are included as they have low risks.


Related Solutions

Hello I need some assistance with these questions I need not so long answers but not...
Hello I need some assistance with these questions I need not so long answers but not too short please Give some examples of How much decisions. What are the implicit costs of having an Airbnb in your neighborhood? What is marginal analysis? What is marginal cost? Under what conditions do marginal costs increase?
Hello I have these questions, Can I please get some assistance, I need not so long...
Hello I have these questions, Can I please get some assistance, I need not so long or short answers please How to decide what job to take. Is that a marginal decision? What is an explicit cost? What is an implicit cost? How is accounting profit calculated? How is economic profit calculated?
INSTRUCTIONS: I HAVE ALREADY ANSWERED QUESTION 1 AND 2. I NEED ASSISTANCE WITH QUESTIONS 3 AND...
INSTRUCTIONS: I HAVE ALREADY ANSWERED QUESTION 1 AND 2. I NEED ASSISTANCE WITH QUESTIONS 3 AND 4. I HAVE FILLED OUT THE PERCENTAGE CHANGE FOR QUESTION 3, AND NEED HELP ON CALCULATING THE OPERATING, INVESTING, AND FINANCIAL SECTIONS. AS WELL AS, THE EQUATIONS FOR QUESTION 4. IF YOU CAN ANSWER QUESTIONS 3 & 4 I WILL AWARD CREDIT. Question 1: Common size for income statement Income Statement (Common Size) :                                                                  Consolidated Income Statement 2011 % 2010 % Revenue $19,176.1...
I need need assistance with all questions below, please. Part Two (COGS and COGM: Two products)...
I need need assistance with all questions below, please. Part Two (COGS and COGM: Two products)       In its second year of operations, Memories, Inc. has decided to expand the product line by producing replicas of historic buildings. These replicas will require the purchase of new building molds at a cost of $.18 per replica. Of course, new doll molds will not be required. All other materials and prices will remain the same.       The replicas require additional processing time because of...
Hello, I have three questions. 1. What happens to the amount of air resistance on your...
Hello, I have three questions. 1. What happens to the amount of air resistance on your car as you drive faster? 2. When will an object falling through air reach terminal velocity? 3. What is the net force and acceleration of an object that has reached terminal velocity?
Looking for assistance on these three quick questions as I can't seem to figure them out....
Looking for assistance on these three quick questions as I can't seem to figure them out. Thanks in advance for your help! 1. Which of the following would decrease the depth of breathing? A. Increased arterial PCO2 B. Exercising C. Increased action potential frequency in neurons from the ventral respiratory group D. Acidic plasma pH E. Decreased action potential frequency in neurons from the dorsal respiratory group F. Overactivation of the respiratory center in the medulla 2. Which of the...
I please need assistance with questions 6-7-8-9 of this question. I previously asked but another case...
I please need assistance with questions 6-7-8-9 of this question. I previously asked but another case was answered under my question Following a strategy of product differentiation, Positive Charge Ltd. makes high quality electronic components. Positive Charge Ltd. presents the following data for the past two years relating to its AA01 product. Year 1 Year 2 Units of AA01 produced and sold 4,000 4,320 Selling price $800 $850 Direct materials (kilograms) 10,400 12,360 Direct materials costs per kilogram $60 $64...
Hi, I have a set of three similar questions here. I don't necessarily need them all...
Hi, I have a set of three similar questions here. I don't necessarily need them all answered. Maybe just one or two, what I really need is the formulas used in solving these types of questions and an explanation of that, which doesn't need to be detailed, just an explanation of the notation and variables used. Please!! Thanks! 25. A levered firm has a debt-to-equity ratio of 0.38 and an equity beta of 1.42. What would be the beta of...
URGENT - i NEED ASSISTANCE WITH QUESTIONS 6-9 ONLY Following a strategy of product differentiation, Positive...
URGENT - i NEED ASSISTANCE WITH QUESTIONS 6-9 ONLY Following a strategy of product differentiation, Positive Charge Ltd. makes high quality electronic components. Positive Charge Ltd. presents the following data for the past two years relating to its AA01 product. Year 1 Year 2 Units of AA01 produced and sold 4,000 4,320 Selling price $800 $850 Direct materials (kilograms) 10,400 12,360 Direct materials costs per kilogram $60 $64 Manufacturing capacity for AA01 (units) 15,000 15,000 Conversion costs $1,350,000 $1,440,000 Conversion...
I need assistance determining the steps required to answer the Chapter 4 Data Case questions 2,...
I need assistance determining the steps required to answer the Chapter 4 Data Case questions 2, 3, and 4 in the Fundamentals of Corporate Finance 4th edition by Berk, DeMarzo and Harford. I have provided the answer to question 1. An analysis isn't required. Only the steps to obtain the answers. Can anyone help? Data Case: Assume that today is August 5, 2015, Natasha Kingery is 30 years old and has a Bachelor of Science degree in computer science. She...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT