tailieunhanh - Cost Accounting Traditions And Innovations - Chapter 14

CHAPTER 14 Capital Budgeting After completing this chapter, you should be able to answer the following questions: Why do most capital budgeting methods focus on cash flows? What is measured by the payback period? | CHAPTER Capital Budgeting 4 LEARNING OBJECTIVES Ater completing this chapter you should be able to answer the following questions 0 Why do most capital budgeting methods focus on cash flows 0 What is measured by the payback period 0 How are the net present value and profitability index of a project measured 0 How is the internal rate of return on a project computed What does it measure 0 How do taxation and depreciation methods affect cash flows 0 What are the underlying assumptions and limitations of each capital project evaluation method 0 How do managers rank investment projects 0 How is risk considered in capital budgeting analysis 0 How and why should management conduct a postinvestment audit of a capital project 0 Appendix 1 How are present values calculated 0 Appendix 2 What are the advantages and disadvantages of the accounting rate of return method INTRODUCING In a few short years has evolved from an idea to the best-known firm on the Internet. The firm s president Jeff Bezos commands the attention of Wall Street and the financial press. On the morning of September 28 1999 planned to make an announcement significantly affecting the world of e-commerce. The following day Mr. Bezos stepped up to a podium in the Sheraton Hotel in New York. Sixteen months ago was a place where you could find books Bezos began hands folded behind his back as he paced the stage. Tomorrow will be a place where you can find anything. With that he introduced the latest installment of the Amazon potboiler the serialization story of one company s ambitious plan to take over the world the e-commerce world that is. Throughout 1999 has been on the move. On average it has announced a major initiative every six weeks. In February it bought 46 of . In March it launched online auctions two days after rival eBay announced a secondary stock offering. In May the company took a 35 piece of . In June 54