Case studies of capital budgeting
Current literature provides data on capital budgeting in South African companies in general but the insight on the capital budgeting techniques used by mining companies is generally limited.
The production cost for company is Rs 3 per unit while the price of each unit is Rs Ambe and Prof.
In the first case, the information gathered provides detailed information about the literature on capital budgeting which enhances the understanding of the topic at hand. The research was structured in two different stages: literature research and a survey.
IRR method has an advantage that Managers tend to better understand concepts in percentages but for it to be a valid way, it needs to be compared to a discount rate. Companies might use different techniques for different projects.
Solved case study on capital budgeting
Also, the involvement of this sector in large projects which are capital intensive has enabled it to qualify as the study population in this research. Because of the time value of money TVM , money in the present is worth more than the same amount in the future. For example for small projects, companies might be advised to use the PB method which is easy to use and understand so as to reduce costs in terms of time consumed in doing some computations whilst for large projects they might use the NPV which can show the profitability of the project Elumilade et al. It has been recommended that FOs should make use of the PI, DPB and NPV frequently when evaluating their projects which have been proved to be the best techniques according to literature. The research has targeted listed companies only because these companies have got proper policies which are in place and getting information about these companies will be much easier. Decision makers can use certain techniques within their organizations for several reasons. The stand- alone risk of the project is evaluated with the sensitivity analysis and scenario analysis techniques assuming that the new system would not affect the current market risk of the bank. Finally, I would like to thank Prof.
Introduction Nowadays, everyone is looking for a quick bite. After getting information about the techniques available in literature, their pros and cons, the techniques used in practice by South African mines and whether there is any relationship between firm and decision makers characteristics with the method used in a firm.
Decision makers can use certain techniques within their organizations for several reasons.
based on 72 review