Capital BudgetingEssay Preview: Capital BudgetingReport this essayCapital Budgeting“Capital Budgeting is the process of determining whether or not projects are worthwhile. Popular methods of capital budgeting include net present value (NPV), internal rate of return (IRR), discounted cash flow and payback period” (Investopedia, Inc.). Capital Budgeting is an important part of corporations and small businesses because they aid in making key business decisions. Capital Budgeting can be looked upon as an appraisal of business investments. Lester Electronic Inc., has decided to undergo an acquisition of Shang-Wa electronics in order maximize its shareholders wealth. The success of LEIs investment decision is dependent upon their ability to define and mitigate possible financial risks involved with the decision.
Capital Budgeting is also used to understand if a large portion of its operating earnings go to other causes. It is one of the most important tools in identifying corporate governance concerns. The question arises: How does ASC’s capital expenditure compare to others on a single source of income, like pension funds and other publicly owned pensions? When is the ASC Capital Expenditure Comparison correct? How does the ASC’s capital expenditure compare to publicly owned pensions and 401(k) plans? How does the ASC’s capital purchase comparisons compare to private equity/retirement plans? Are investment allocations made based solely on historical value over time? What other resources exist for performing comparisons such as credit rating, government bonds, municipal bonds, stock market indices, credit risk capitalizations, financial stability indexes, and such other factors?
When Should I Buy? https://www.freeessays.education/financial-health-of-the-acquiring-company-and-possible-financial-risks-essay/
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