Discuss various types of capital budgeting techniques. Also identify the most appropriate technique and justify with logical reasoning. 2. The managers of a firm wish to expand the firm's operations and are trying to determine the amount of debt financing the firm should obtain versus the amount of equity financing that should be raised. The managers have asked you to explain the effects that both of these forms of financing would have on the cash flows of the firm. Write a short response to this request. 3. Give some examples of ways in which manager's goals can differ from those of shareholders. 4.You want to begin saving for your daughter’s college education and you estimate that she will need $150,000 in 17 years. If you feel confident that you can earn 8% per year, how much do you need to invest today? 5. Brodax has $20 million in current assets and $10 million in current liabilities, while Smaland's current assets are $10 million versus $20 million of current liabilities. Both firms would like to "window dress" their end-of-year financial statements, and to do so each plan to borrow $10 million on a short-term basis and to then hold the borrowed funds in their cash accounts. Which of the statements below best describes the results of these transactions? Justify your choice with logical arguments. a.The transaction would improve both firms' financial strength as measured by their current ratios. b.The transactions would raise Broadax's financial strength as measured by its current ratio but lower Smaland's current ratio. c.The transactions would lower Brodax 's financial strength as measured by its current ratio but raise Smaland's current ratio. d.The transaction would have no effect on the firm' financial strength as measured by their current ratios. e.The transaction would lower both firm' financial strength as measured by their current ratio
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Part A
Attempt all the five questions.
1 Discuss various types of capital budgeting techniques. Also identify the most appropriate technique and justify with logical reasoning.
2. The managers of a firm wish to expand the firm's operations and are trying to determine the amount of debt financing the firm should obtain versus the amount of equity financing that should be raised. The managers have asked you to explain the effects that both of these forms of financing would have on the cash flows of the firm. Write a short response to this request.
3. Give some examples of ways in which manager's goals can differ from those of shareholders.
4.You want to begin saving for your daughter’s college education and you estimate that she will need $150,000 in 17 years. If you feel confident that you can earn 8% per year, how much do you need to invest today?
5. Brodax has $20 million in current assets and $10 million in current liabilities, while Smaland's current assets are $10 million versus $20 million of current liabilities. Both firms would like to "window dress" their end-of-year financial statements, and to do so each plan to borrow $10 million on a short-term basis and to then hold the borrowed funds in their cash accounts. Which of the statements below best describes the results of these transactions? Justify your choice with logical arguments.
a.The transaction would improve both firms' financial strength as measured by their current ratios.
b.The transactions would raise Broadax's financial strength as measured by its current ratio but lower Smaland's current ratio.
c.The transactions would lower Brodax 's financial strength as measured by its current ratio but raise Smaland's current ratio.
d.The transaction would have no effect on the firm' financial strength as measured by their current ratios.
e.The transaction would lower both firm' financial strength as measured by their current ratios.
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