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When it comes to investing business capital, a financial manager would want to know whether that investment is a good one. The capital budgeting techniques reviewed this week provide the financial manager with tools to make good investment decisions.

Consider this week's instructor video. Imagine that you are a financial manager for a medium-sized company, and discuss the following:

1. Describe how you would use capital budgeting techniques to determine whether a business investment is a good idea.
2. Give an example of a business investment venture and how you would use capital budgeting to ensure it is a good investment.

Sagot :

GinnyAnswer

Final answer:

Financial managers utilize capital budgeting techniques like NPV and IRR to evaluate business investments for profitability.


Explanation:

Using Capital Budgeting Techniques to Evaluate Business Investments:

Capital budgeting techniques are crucial tools for financial managers to assess the viability of investments. One key method is to calculate the Net Present Value (NPV), which considers the project's cash flows and the time value of money. Additionally, using the Internal Rate of Return (IRR) helps in determining the project's profitability.

Example of Applying Capital Budgeting:

Let's consider a manufacturing company deciding to invest in a new production line. By estimating the project's cash inflows and outflows over its useful life, calculating the NPV, and comparing it to the required rate of return, the financial manager can determine if the investment is financially sound.


Learn more about Capital Budgeting Techniques for Business Investments here:

https://brainly.com/question/34947070


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