Saturday, February 29, 2020
Capital Budgeting Decisions
The purpose of the report is to help the GM (A Large Carpentering Firm) to take the investment decision. GM wants to replace one of its existing sawing machines with the new one. For this purpose, two alternate sawing machines are considered, machine A is fully automated while machine B operates on standard technology. The problem is to find out which machine will be best suitable for replacement through using capital budgeting techniques such as NPV, IRR and pay back period method. There is clear objective to evaluate proposed Machines (A and B) with the help of various techniques of capital budgeting techniques. Another purpose is to guide management of GM on selection of best alternative through applying practical as well as theoretical aspects of capital budgeting. In order to evaluate the Machine A and Machine B through using capital budgeting methods, following methods have been used. Pay back period method is one of the most used methods used for capital budgeting decisions. It measures the length of time required to recollect the expenses made on the project in first year. It helps to analyst to know whether to undertake the project or not. Longer pay back periods are not desirable for investment purpose as compare to project where cost of project is recovered in less time (Brigham and Ehrhardt, 2011). This method does not consider time value of money and cash inflows are subject to any present value factor as in case of other methods. In case GM firm, Mr. David wants to evaluate two machines on pay back period basis. Calculations are as under: Pay Back Period of Machine A: 4 years + [(660,000-644,000)/ (1,094,000-644,000)] years                                                            = 4 years +0.053 years                                                            = 4.053 years Pay Back period of Machine B: 3 years + [(360000-304000/ (390000-304000)] years                                                            = 3.65 years Net present value is the difference of present value of cash inflow and present value of cash outflows. This method is used in capital budgeting decisions and helps in evaluating the profitability of project or investment. This method considers time value of money, so, it is regarded as one of best method to evaluate the project for capital budgeting purpose (Pratt, 2010). Net Present Value of Machine A: Present value of cash inflows for Machine A – Present values of cash outflows for Machine A                                    = $ 718,132.88 - $ 660,000                                      = $ 58132.88 Net Present Value of Machine B: Present value of cash inflows for Machine B – Present values of cash outflows for Machine B                                    = $ 43483.24 Internal rate of return refers to an interest rate where all the present value of cash inflows and cash outflows become zero. This interest rate is the rate at which project will earn if that project is selected (Drake and Fabozzi, 2012). This method of capital budgeting is used to analyze the attractiveness of the project. Project or investment is selected in case IRR is more than the firm required rate of return. Project or investment is rejected where IRR is less than the firm required rate of return. In the case of GM Company, the required rate of return is 13 %. On analyses if it has been found that IRR of Machine A or B is greater than that machine will be selected which has highest IRR (Fridson and Alvarez, 2011). On the basis of above analysis, the key findings are as under:  $                                   58,132.88 Rankings of Machines as per the method On the basis of various factors and ranking procedure applied to choose either machine A and B, it is concluded that GM firm must invest in Machine B to receive the outflows in less time period with highest IRR. As regards to NPV, Machine A has to be selected but it is also true that both machines have positive NPV (Staubus, 2013). There are many other factors that firm must considered while taking the investment decisions. Every investment requires outflow of cash at the beginning keeping in mind that such investment will provide higher benefits in future years (Bull, 2007). Therefore, decision related to plant and machine must be evaluated using capital budgeting methods but it is also important to consider factors like technology used in machine, other cost related with machine and functional capacity of the machine. In case of GM firm, Mr. David should consider following factors: Brigham, E. F. and Ehrhardt, M. C. 2011. Financial Management: Theory and Practice. Mason: Cengage Learning. Bull, R. 2007. Financial Ratios: How to use financial ratios to maximize value and success for your businesses. Elsevier. Drake, P. P. and Fabozzi, F. J. 2012. Analysis of Financial Statements. John Wiley & Sons. Fridson, M. S. and Alvarez, F. 2011. Financial Statement Analysis: A Practitioner's Guide. John Wiley & Sons. Menicucci, E. 2014. Fair Value Accounting: Key Issues Arising from the Financial Crisis. Springer. Mumba, C. 2013. Understanding Accounting and Finance: Theory and Practice. USA: Trafford Publishing. Pratt, J. 2010. Financial Accounting in an Economic Context. John Wiley & Sons. Staubus, G.J. 2013. The Decision Usefulness Theory of Accounting: A Limited History. Routledge.
Thursday, February 13, 2020
The new age Essay Example | Topics and Well Written Essays - 750 words
The new age - Essay Example Like a number of ancient religions of the world, Scientology holds the view that people are placed on earth to establish their own salvation and they can only comprehend the relationship with God by realizing this. The appeal of scientology is in a person’s capacity to solve his own issues (Frost & Frost, 2012). When a person is able to solve his own problem, he is also capable of helping other individuals. It also allows a person to think for himself. Question 2 Both science and religion hold assertions to reality. Religion is made up of faith and belief. Religion claims events are factual because they want them to be, and they decline to alter their notions just because there are a number of infuriating information in the way. In contrast, science incorporates theory and evidence. Science asserts that things are factual because they concur with the proof and theory also gives it support. Additionally, if there is new evidence, the theory is modified, even if it requires givi ng up prior valued suggestions. In addition, every scientific theory is in principle refutable, and in the end every theory will be negated. In contrast, religion can in principle not be refuted. This does not play a part to its evidence. Moreover, religion cannot be proven (Frost & Frost, 2012). ... Moreover, globalization illustrates the connection between cultures of macro-social components. These components entail politics, economics, and religion. Also, globalization may universalize and wear down the features of a local grouping (Lewis, 2007). Significant factors in globalization include the advancement of the internet, telecommunications and transportation infrastructure. These factors generate additional interdependence of cultural and economic activities. Also, Atheism plays a part in globalization. Atheism refers to the refusal of belief in the being of divinity. It also implies that there is not a deity that exists. Atheists are less authoritarian, nationalistic, close-minded, prejudiced, ethnocentric, anti-Semitic, dogmatic, and racist (Frost & Frost, 2012). Therefore, they can sell their merchandise, goods, or services to all people and markets all over the world. Atheists are also pro-immigration and presume that any migration is beneficial migration because it is e ffortless to incorporate these individuals in the global culture. Question 4 Secularism refers to the rule of disconnection of government units, and the individuals authorized to represent the nation, from religious dignitaries and religious institutions. Secularism may highlight the claim to liberty from religious teachings and rule, and the liberty to freedom from governmental obligation of religion to the individuals in a state that is nonaligned on issues of belief. Secularism may also illustrate the notion that human beings decisions and activities, mostly political, must not be biased by religious authority. It is better that states embrace secularism than religion (Frost & Frost, 2012). This is because secular state will incorporate the views of the entire
Saturday, February 1, 2020
What does it mean to be a human Essay Example | Topics and Well Written Essays - 1750 words
What does it mean to be a human - Essay Example Religious elites have on the other hand come up with contradictory argument on the origin, traits as well as development of human species (Lee 3). However, despite the existence of various conflicting ideas and views about the concept human, scholars have come into a consensus on some of the main traits of human. There are some scholars who hold the perception that, the current definition of basic concepts human lacks some very essential transformation that are brought about by emerging technological development(Martin Luther King 23). In addition, modern researchers and critical thinkers have as well condemned the current information on human as being shallow and inconsistent. This therefore means that the knowledge on human is a very essential aspect in describing human growth and development. Most of the accessible information regarding human cannot stand the test of time. However, despite being inadequate, there is sufficient information to describe the concept human. The subsequ ent essay will therefore describe the meaning of human. What Makes Us Human? At its basic description, being human is being born with physical appearance and traits that defines their interaction with others. By referring to this definition, being human is the act one being born into the continuous community of human being. Despite having, the characters that are used to define human being, researchers and other social thinkers have as well come up with other traits that can be used to describe human. For a starter, human must understand moral principle and standards of happiness and wisdom. Every peaceful society is defined and identified by specific moral and principles. Therefore, to be categorised as human, one must demonstrate the understanding and effective utilisation of the existing moral and ethical issues. Secondly, social life is a very essential aspect that defines the concept human. In this case, social life is used to describe one interaction with other members of the society. Modes of communication, social role and responsibilities, social expectations, social roles and regulations as well as social beliefs are some of the core aspects that describe one social life. Other social aspects that are used to describe human social life entails eating pattern and habit, means of taking care of infant and new borne, means of building social networks with community members and members of other societies and acceptable means of interacting with the environment(Lee 7). Thirdly, language is a very essential factor that define peaceful community. Language is described as the main means of enhancing communication in the society. Therefore, for an individual to qualify to be human he or she ought to understand some of the basic signs and symbols that enhance effective communication in a society. On the other hand, researchers have claimed that, communication signs and symbols play a very essential role in determining the manner in which human being live and op erate in the society. Language and other communication and interaction symbols as well offer new ways and means of coping with the unpredictable changes in the environment. In addition, human is defined by one’s human capacity to peaceful community and happiness. Compared to other creatures in the universe, human being is presumed to have the highest level of brain capacity to interact and communicate with others. The memory capacity of an effective and complete human is as well expected to be high and functional. Based on the accessible scientific researches and theories, as human being encounter new social, economic, cultural, and
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