Respond to the required questions, double-spaced, APA format (source citations and reference insertions) essay (Each Question). In each Case Study, you must use at least three (3) references (in text), including the textbook (included below).
Textbook reference:
Berk, J. & DeMarzo, P. (2017). Corporate Finance: The Core (Fourth Edition). Boston, MA: Pearson.
(This Assignment Box maybe linked to Turnitin.)
Respond to the required questions, double-spaced, APA format (source citations and reference insertions) essay (Each Question). In each Case Study, you must use at least three (3) references (in text), including the textbook (included below). Textbook reference: Berk, J. & DeMarzo, P. (2017). Corporate Finance: The Core (Fourth Edition). Boston, MA: Pearson. (This Assignment Box maybe linked to Turnitin.) 1- 150 Words: Discussion The capital budgeting process is important, but is it the most important process that a firm undertakes. - Why or why not? - If you believe there is a more important process, what is it and why do you think it is more important? 2- 100 Words (Kelly Therrian) – Reply and Comment on the following: As (Cole-Ingait, 2019) describes “Capital budgeting is the process of evaluating the viability of long-term investments with a view of allocating financial resources to profitable investments. The appraisal techniques used in capital budgeting mainly focus on the costs of investments relative to the benefits they generate during their economic life. Indeed, capital budgeting is one of the most important decisions company management can make, because it facilitates the appraisal and selection of the most viable investments. It actually provides the absolute decision criteria for accepting or rejecting investment proposals.” I believe Capital Budgeting is the foundation to the framework of an organizations financial health. At least an organization that deals with any long term contracts. Without having a long term strategy as to how the organization will survive, the short term decisions wouldn’t matter. Capital budgeting is a responsible way to make sure employees and expertise will be retained because there will be a steady cash flow to pay them and keep the lights on to the office. Certain industries, this is the most important part of their business. As a government contractor, the organizations I have worked for this is absolutely the most important aspect for them. Without winning contracts, we don’t have a need for more employees or bigger work spaces. Government contracts also have many years of length attached to them. A lot of factors have to be considered and “what if” scenarios addressed when coming up with a price for the contract. 100 Words (Stacy Campos) – Reply and Comment on the following: Capital budgeting is the process of analyzing investment opportunities and deciding which ones to accept. The capital budget lists the potential projects and investments that a company plans to undertake during the coming year (Berk & DeMarzo, 2017). A challenge that the company faces, especially the Finance and Accounting team, is where to spend the money and how to decide where to spend it. Forecasting future revenues and expenses is a difficult task because if these forecasts are not accurate, the budgeting plan becomes less useful than anticipated. Luckily, within the capital budgeting process, there are other steps that one can take to further explore the financial impact of certain investment opportunities. These steps could help take uncertainty into consideration. Tools such as the break-even analysis and sensitivity analysis could assist in any uncertainty or assumptions. When we are uncertain regarding the input to a capital budgeting decision, it is often useful to determine the break-even level of that input, which is the level for which the investment has an NPV of zero. In addition, the sensitivity analysis breaks the NPV calculation into its component assumptions and shows how the NPV varies as the underlying assumptions change. In this way, the sensitivity analysis allows us to explore the effects of errors in our NPV estimates for the projects (Berk & DeMarzo, 2017).