FIN 6554/FIN6013: Case 1-Capital Budgeting Assignment Sample Malaysia
Capital budgeting is vital in marketing decisions. Decisions on investment, which take time to mature and have long term consequences for your company’s success or failure, must be made based on the return that they will make from those investments now not just what may happen when there’s profit involved but also if an idea has potential social benefits then these should always outweigh any short-term losses incurred from its implementation – this way you can put yourself out into new markets while still staying true with core values!
Investment decisions are usually made with an eye on the present value of future returns. If you know how long your investment will take to mature, it can be more profitable for some people or businesses not only putting planned investments into projects but also banking interest instead of spending them immediately-or investing elsewhere if there’s competition already in that market space!
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At lower levels within marketing departments who must make tough calls about whether they should spend more money advertising their product over others, this becomes even trickier because measuring success by how much you’ve gained through your investment might not be as clear-cut. For example, if a paid advertising campaign was responsible for an increase in revenue and profit then it’s safe to assume that the marketing team will want to invest more into this specific promotion.
FIN6554/FIN6013: Case 1 – Capital Budgeting Assignment Activity
By the end of this case study, you will be able to:
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Assignment Acitivity1: An understanding of the importance of capital budgeting in marketing decision making
The importance of capital budgeting in marketing decision-making is one that many marketing majors often fail to grasp. More often than not, students are taught topics such as analyzing costs and revenues, which relate primarily to the accounting side of the company. What they don’t learn about are important questions that affect late or early production decisions, specifically relating to risk management.
financial concerns arise when there are spottily spread out investments for a given time period. One should make sure their investments give steady returns on your money over time–throughout the course of production, you will be increasing the number of coins gained per unit invested while decreasing return by spending down existing savings. This creates two different disadvantages– first, short-term financial worries created by the need to keep pace with the number of coins you’re spending and, second, a negative effect on long-term savings by lowering your ability to earn significant interest.
Assignment Activity 2: An explanation of the different types of the investment project
Investment funds are used to invest in projects. Debt funds give investors loans while equity funds help with investing in stocks and bonds, among other options. There are also commodity funds that invest in anything related to commodities. One can choose from a number of types of investment options when it comes to these investments.
The importance of big data for an entrepreneur is its potential use as a means to fuel growth or create innovative products that serve the needs of the market. A good way for entrepreneurs to get started is by mapping out their customer’s markets and how they function before diving into developing a product. Claims there are various different types of investment projects but does not say what they are.
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Assignment Activity 3: An introduction to the economic evaluation of investment proposals
The economic evaluation of investment proposals can be done in several ways, but the stakeholder who is providing the investment proposal will usually insist on a particular method. The three most common are the net present value (NPV), levelised cost of energy (LCOE), and payback period.
Net Present Value
NPV is an assessment that looks at how much something or somewhere costs in today’s dollars to keep it running for some time, and compares it with what it would be worth if all expenses were paid back over one year. If NPVs always come out positive, then there’s no reason not to invest. But they don’t – because often investments must generate cash-flows not only now but sometimes in the future. This means that NPV is a good guide for some types of decisions, but not all.
Levelised cost of energy
LCOE is a metric to measure the overall costs of producing electricity from a power plant using different energy sources, specifically renewable and non-renewable ones. It measures how much it would cost over the life of the plant to buy all the power it would generate.
LCOE is an important investment decision tool, especially in today’s world where many nations are trying to shift their focus from non-renewable energies to renewable sources like solar and wind. It makes energy producers accountable for environmental factors while making sure they offer clean energy at a reasonable price.
Levelised cost of energy is an investment decision tool that measures costs over the life of a plant to buy all the power it would generate.
Despite the success of net present value and LCOE, there are still cases in which these aren’t suitable choices for economic evaluation. One example is if the returns are expected to come in at different times, making it impossible to predict the exact investments that will need to be made. This is often the case with real estate or infrastructure projects. In this type of situation, the payback period can be used instead of NPV and LCOE.
The payback period is a metric for investment evaluations used when returns on investments are expected to be received at different times.
Assignment Activity 4: The importance of the concept and calculation of net present value and internal rate of return in decision making
The concept and calculation of net present value (NPV) and internal rate of return (IRR) are used to help make decisions about financial matters. NPVs should be used in capital budgeting decisions, where the length of time is not clear. IRRs should be less desirable for use with other types of investments that don’t have the same timelines as capital expenditures, but they should still always be considered.
Net present value is a math formula that helps assess how much money will come back over a certain time period using only today’s cash flows. This is especially useful when dealing with long-term investments because these can span multiple periods at risk for different rates of return or inflation adjustments over different lengths. For this reason, it is usually only appropriate to use NPVs in capital budgeting decisions.
Internal rate of return is another math formula that helps assess the profits made over a certain time period, given both today’s and tomorrow’s cash flows. It can be used when you need to know how fast money will grow even though the timing may seem uncertain. This method should be used in cases where the length of the project is greater than one period, which makes it ideal for long-term investments.
Assignment Activity 5: The advantages and disadvantages of the payback method as a technique for the initial screening of two or more competing projects
The advantages of the payback method as a technique for the initial screening of two or more competing projects are that it provides a convenient, easily understood qualitative basis for ranking various alternatives and can be used shortly after analysis is begun.
The disadvantages of the payback method as a technique for the initial screening of two or more competing projects are that it does not provide information about general profitability and tends to favor those alternatives with shorter periods between cash inflows and outflows. Whereas investments with high rates of return often generate higher future benefits by reducing demands on scarce resources, methods such as present worth accounting do not discriminate among individuals who want improvements in different areas.
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