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Capital Budgeting Assignment


 

 

Among all the accounting methods and principles capital budgeting is worth mentioning. This subject is considered as one of the toughest subjects under the branches of Accountancy. Students need help for doing their assignments on capital budgeting. In the field of corporate finance Capital budgeting is used as a tool to determine the worth of long term investments of a company. Capital Budgeting is also popular as investment appraisal which is being used by large scale business corporations for allocating the resources in the future projects. Moreover, it is used by the business organisations to understand the current value of ongoing projects. In fact, the dividends which are being paid to the shareholders are also set with the help of analysis methods of capital budgeting.

Now the finance students can get online assignment help in various areas of capital budgeting, such as:

  • Capital budgeting analysis help
  • Accounting assignment help
  • Capital budgeting decision help
  • Cash flow analysis help
  • Capital budgeting method help
  • Cash flow report help
  • Budgeting help

Methods used in Capital Budgeting

There are a number of formal methods that are usually used capital budgeting. The major methods of capital budgeting are discussed below. Students should remember all of these minutely.

  1. Accounting rate of return
  2. Payback period
  3. Profitability index
  4. Net Present value
  5. Internal rate of return
  6. Modified Internal rate of return
  7. Real options valuations
  8. Equivalent annuity method

 

Accounting rate of Return

Students of finance need to be well accustomed with the term called accounting rate of return because students who seek assignment help need to calculate the accounting rate return. It is the rate of return gained from the net income of the suggested capital investment. The following formula is used to calculate the accounting rate return:

 

Average return during period

_________________________

 

Average investment

 

As per the above-mentioned formula the average investment is referred to the average amount of capital that has spent for the project. The calculation of average investment needs to follow the following formula

Book value at the beginning of year 1 + book value at the end of useful life

________________________________________________________________

2

 

Taking for instance if any company announces that the accounting rate of return is 7 percent then it tries to mean that shareholders of this company would get 7 cents out of one dollar of the total investment. The accounting rate of return has been briefly described here. Students can log on to MyAssignmentSolution.com and will be able to get more information on analysis methods of capital budgeting.

Payback period

Among all the capital budgeting methods Payback period comes in the second position in deciding the shareholder’s dividend. Students also need help in accounting assignments. With this term, the necessary period is referred. This is the time to recoup the amount of investment made for the project. Another agenda of this accounting method is to reach the breakdown point. Here the students should keep in mind that the time value of the invested capital is considered under this. Only the time to pay back the invested capital itself is considered under this method. Say for, if the total amount of the invested capital of a business organisation is $10,000 and the amount of return is $5,000 per annum, and then the payback period will be two years. There are a number of limitations of payback period. For instance, this method does not consider the costs of risks that has taken, the time value of money and opportunity cost. However, this particular is considered as simple and most of the business organisations use this method. This brief discussion may not fulfil all the queries regarding capital budgeting, in that case, students can log on to the website of MyAssignmentSolution .com.

Figure 2

Profitability index

In order to explain the profitability index it is important to say that it is the ratio of payback to the investors divided by investment made. This method is important the students who are studying capital budgeting. The following formula is used for the calculation of this method:

 

P.I. = PV of cash flow

Initial Investment

Here P.I. = Profitability index and

P.V. = Present Value

 

Profitability index is mainly used for quantifying the amount of value for every investment that have been proposed. Moreover, it also helps in ranking the investments as per their values. Students can take help of MyAssignmentSolution.com for more information regarding capital budgeting.

Net present value

The total summation of all the values of cash flow is considered as the Net Present Value (NPV). in this method both the incoming and outgoing cash for all the projects. This method is also an important part of capital budgeting assignment help. Students need to evaluate this method calculation in their assignment papers. The discounted cash flow (DCF) is used to find out the net present value (NPV) for making an estimation of each potential project. This valuations needs to estimate the size and timing of cash flow in the ongoing project. The future cash flows are discounted in order to determine its current value.

The discount rate affects the NPV highly. The selection of proper discount rate is sometimes called the hurdle rate. On any investment, the hurdle rate is considered as the minimum acceptable return. It reflects the risk factors of the invested capital, which is measured by volatile nature of cash flow. This is considered under the financing mix. Managers in the business organisations may use several models such as, CAPM or the APT in order to make an estimation of discount rate assignment help. For further information, students can take help of MyAssignmentSolution .com

Internal rate return  

In the field of or it is better to say the corporate finance rate of return is the rate of profit in a particular project. The internal rate return (IRR) is that rate of discount which is mostly used in decision making of capital budgeting. It helps to determine the present value of all kind of cash flows. The internal rate return is mainly used for ranking projects of investments. The highest-ranking project is used at first. MyAssignmentSolution.com provides an efficient help in the capital budgeting decision help.

Modified Internal Rate of Return

The name of the method itself suggests its meaning. It is nothing but an upgraded version of IRR. One of the setbacks of internal rate of return is that it is used for the calculation of actual annual profitability in a project. In this method, the intermediate cash flow is not considered at all. In that case the actual IRR is lower than the amount that has been calculated. However, modified internal rate of return is preferred by the business enterprises than IRR.

Real Option Valuation

Capital budgeting also includes the method of Real Option Value. It is another important method under the capital budgeting. Real option valuation is the option, which is available in front the investors and it opens up more possible capital investment. These options are also known as ‘real’ as the options are related with tangible assets in the company such as, equipments and land. Students of capital budgeting needs to understand this method vastly for doing their assignments. In that case, they can avail the help of MyAssignmentSolution.com. In order to do so they need to log on to the website MyAssignmentSolution.com.

Equivalent Annual Annuity

The assignments of capital budgeting also demands vast knowledge in Equivalent Annual Annuity (EAA). Equivalent Annual Annuity is one of the most popular approaches for the calculation of annual cash flow, which is generated, in a particular project. In this method, the students need to know about annuity as well. Annuity is the financial product, which is designed on the basis of acceptance of the funds both from an individual and any other company. For any further information, the students of capital budgeting can take help from MyAssignmentSolution.com in order to accomplish their assignment works.

The above-mentioned methods are the chief procedures which are mostly used in the capital budgeting. Capital budgeting is becoming more important as the large amount of money is invested in the ongoing business projects. Finally the decision-making on the capital budgeting is important in the business projects.

Efficient help provided in the Finance and Accounting assignment

It is that finance and accounting are one of the most important areas that the management students need to study beside the Human Resources Management and Marketing. Students who need help in their capital budgeting analysis help and capital budgeting decision help have to go to the website of MyAssignmentSolution.com and log into the site. The expert team of MyAssignmentSolution.com is ready to provide their help in this kind of accounting assignments. The students are ensured that the quality of the assignment papers will be maintained to the utmost, which will help them to achieve a higher grade in the examination. Students of capital budgeting can even take any further assistance for resolving their queries regarding assignments.


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