Talk About: -Thomas Cook

question 106

Essay

Talk about:
-Thomas Cook

Appreciate the different approaches to capital budgeting preferred by firms of varied sizes.

Understand the concept and importance of capital rationing in project selection.

Calculate and interpret NPV (Net Present Value) for varying projects.

Calculate and interpret IRR (Internal Rate of Return) for different investments.

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Definitions:

Incremental Cash Flows

The extra cash flow an organization gains by initiating a new project.

Total Cash Flows

The aggregate sum of cash entering and leaving a corporation, which plays a significant role in determining its financial fluidity.

Income Taxes

Taxes levied on both earned income (wages, salaries) and unearned income (dividends, interest), imposed by government authorities.

Sunk Cost

A cost that has already been incurred and cannot be recovered, and should not affect future investment or spending decisions.