Capital budgeting methods are used by almost all organizations to help determine their decision in long-term capital projects. According to Schall, Sundem, and Geijsbeek, Jr, a 1978 survey reflected that almost all companies surveyed used one of the capital budgeting methods discussed in Chapter 24 (Payback, Accounting Rate of Return, and NPV; IRR is one also considered in the survey), with 86% of surveyed firms using more than 1 method (see source below).. Today, these methods continue to receive vast usage among organizations even in the midst of more advanced technological methods. A 2005 study by Apap & Masson looked at capital budgeting techniques utilized by publicly-traded utility companies, noting almost 73% of surveyed companies using one or more of the methods discussed (see source below).
Based on your knowledge gained in this unit, please address the following questions:
· Why are these methods so widely used?
· What are the advantages of using these methods?
· Which method do you think is used the most, and why?
· What other metrics could you analyze besides cash flows (or financial) when determining whether or not to accept a project?
The post needs to contain relevant terminology and a firm understanding of the capital budgeting methods being discussed in order to achieve the maximum number of points. space
Sources noted above:
Schall, Lawrence D., et al. “Survey and Analysis of Capital Budgeting Methods.” The Journal of Finance, vol. 33, no. 1, 1978, pp. 281–287. JSTOR, JSTOR, www.jstor.org/stable/2326365
Apap, Antonio, Masson, Dubos. “A Survey of Capital Budgeting in Publicly Traded Utility Comapnies.” Southwest Business and Economics Journal. http://www.cameron.edu/uploads/images/6024/A_Survey_of_Capital_Budgeting_in_Publicly_Traded_Utility_Companies.pdf
Capital budgeting methods are used by almost all organizations to help determine their
decision in long
–
term capital projects. According to Schall, Sundem, and Geijsbeek, Jr,
a 1978 survey reflected that almost all companies surveyed used one of the capita
l
budgeting methods discussed in Chapter 24 (Payback, Accounting Rate of Return, and
NPV; IRR is one also considered in the survey), with 86% of surveyed firms using more
than 1 method (see source below).. Today, these methods continue to receive vast
usag
e among organizations even in the midst of more advanced technological methods.
A
2005 study by Apap
& Masson
looked at capital
budgeting techniques utilized by
publicly
–
traded utility companies, noting almost 73% of surveyed companies using one
or more of
the methods discussed (see source below).
Based on your knowledge gained in this unit, please address the following questions:
·
Why are these methods so widely used?
·
What are the advantages of using these methods?
·
Which m
ethod do you think is used the most, and why?
·
What other metrics could you analyze besides cash flows (or financial) when
determining whether or not to accept a project?