Introduction to capital budgeting

MA – May 2020 – L2 – Q4a – Introduction to capital budgeting, Decision making techniques

Identify and explain the stages in the capital investment decision-making process.

Question

a) Senchi Ltd is evaluating an investment proposal to manufacture River boat, which has performed well in test marketing trials conducted recently by the company’s research and development division.

Required:

Identify and explain the stages in the capital investment decision-making process. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Investment, Decision-making process, Investment Appraisal, Strategic Management
Level: Level 2

Topic: Decision making techniques, Introduction to capital budgeting
Series: MAY 2020

MA – May 2017 – L2 – Q1a – Introduction to capital budgeting,

Calculate the break-even rate for a taxi service investment considering a 5% annual cash flow increase over five years.

Question

Kwame, after his National Service and with no hope of securing a job in the formal sector, has decided to run a taxi service. The following forecast has been made for the operation of a service between Abisim and Sunyani:

Revenue totaling GH¢300 a week for 52 weeks in a year. This is net of fuel and other variable costs.
Tyres: four pieces for a year at GH¢120 per unit.
Maintenance and servicing: GH¢120 per month.
Salaries: GH¢3,000 per year.
Insurance: GH¢350 per year.

The net cash flow will increase at 5% per annum for the next five years due to inflation. The cost of the vehicle is estimated at GH¢28,000. The project appears quite profitable based on the NPV criteria using the Government policy rate of 26%. However, the banks are offering rates far higher than the policy rate.

Required:

You are to calculate the break-even rate for the project.

(10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Break-even Analysis, Capital Budgeting, Financial Decision-Making, Inflation impact, NPV Calculation
Level: Level 2

Topic: Introduction to capital budgeting
Series: MAY 2017

MA – May 2020 – L2 – Q4a – Introduction to capital budgeting, Decision making techniques

Identify and explain the stages in the capital investment decision-making process.

Question

Required:

Identify and explain the stages in the capital investment decision-making process. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Investment, Decision-making process, Investment Appraisal, Strategic Management
Level: Level 2

Topic: Decision making techniques, Introduction to capital budgeting
Series: MAY 2020

MA – May 2017 – L2 – Q1a – Introduction to capital budgeting,

Calculate the break-even rate for a taxi service investment considering a 5% annual cash flow increase over five years.

Question

Revenue totaling GH¢300 a week for 52 weeks in a year. This is net of fuel and other variable costs.
Tyres: four pieces for a year at GH¢120 per unit.
Maintenance and servicing: GH¢120 per month.
Salaries: GH¢3,000 per year.
Insurance: GH¢350 per year.

Required:

You are to calculate the break-even rate for the project.

(10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Break-even Analysis, Capital Budgeting, Financial Decision-Making, Inflation impact, NPV Calculation
Level: Level 2

Topic: Introduction to capital budgeting
Series: MAY 2017

Topic: Introduction to capital budgeting

Filter by Professional Bodies

Filter by Subject

Filter by Series

Filter by Topics

Filter by Levels

MA – May 2020 – L2 – Q4a – Introduction to capital budgeting, Decision making techniques

Identify and explain the stages in the capital investment decision-making process.

MA – May 2017 – L2 – Q1a – Introduction to capital budgeting,

Calculate the break-even rate for a taxi service investment considering a 5% annual cash flow increase over five years.

MA – May 2020 – L2 – Q4a – Introduction to capital budgeting, Decision making techniques

Identify and explain the stages in the capital investment decision-making process.

MA – May 2017 – L2 – Q1a – Introduction to capital budgeting,

Calculate the break-even rate for a taxi service investment considering a 5% annual cash flow increase over five years.

Our offerings

Contact Info

Customer

Get In Touch

Topic: Introduction to capital budgeting

Filter by Professional Bodies

Filter by Subject

Filter by Series

Filter by Topics

Filter by Levels

MA – May 2020 – L2 – Q4a – Introduction to capital budgeting, Decision making techniques

Identify and explain the stages in the capital investment decision-making process.

You're reporting an error for "MA – May 2020 – L2 – Q4a – Introduction to capital budgeting, Decision making techniques"

MA – May 2017 – L2 – Q1a – Introduction to capital budgeting,

Calculate the break-even rate for a taxi service investment considering a 5% annual cash flow increase over five years.

You're reporting an error for "MA – May 2017 – L2 – Q1a – Introduction to capital budgeting,"

MA – May 2020 – L2 – Q4a – Introduction to capital budgeting, Decision making techniques

Identify and explain the stages in the capital investment decision-making process.

You're reporting an error for "MA – May 2020 – L2 – Q4a – Introduction to capital budgeting, Decision making techniques"

MA – May 2017 – L2 – Q1a – Introduction to capital budgeting,

Calculate the break-even rate for a taxi service investment considering a 5% annual cash flow increase over five years.

You're reporting an error for "MA – May 2017 – L2 – Q1a – Introduction to capital budgeting,"

Our offerings

Contact Info

Customer

Get In Touch

admin