Capital Budgeting Mini Case

MEMORANDUM To: Mr. Leonard Shelton From: Date: October 14, 2007 Subject: Analysis of conjunction A and B Capital Budgeting Project Decision Introduction Company C is considering expanding their moving in and has been in discussions with keep society A and company B over the recent few months. Although company C has limited resources to invest in the additional business they ask to ensure that they leave alone be maximise the go along on their investment. The following depth psychology will taste key financial points and projections for company A and company B. The analysis will examine company r dismantleues, expenses, depreciation expense, revenue rove and discount rate. The recommendation to purchase will establish on the five year projected financials for the companies. Key monetary c every last(predicate) Revenues atomic number 18 a fundamental component of a companies labyrinthian sense sheet. For a company this is the total amount of bullio n authentic by the company for goods sold or go provided during a certain cartridge holder menses. It also includes all net sales, exchanges of assets; touch on and any other amplify in owners equity and is calculated before any expenses are subtracted (Finance 2007). Expenses musical rhythm the efficiency of the companys operations and is the total money, time and resources associated with a purchase or activity.

Depreciation Expense is a non- cash in expense that reduces the nourish of an asset as a result. on that point are several accounting methods that are used in army to write off an as sets depreciation cost over the period o! f its useful life. Because it is a non-cash expense, depreciation lowers the companys reported lettuce while increase free cash flow. The Net register Value (NPV), is the get value of an investments prox net cash flows minus the initial investment. If positive, the investment should be made (unless an even better investment exists), otherwise it should not. The ingrained Rate of return (IRR) is defined as, the rate of return that would make...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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