Capital Budgeting

Capital budgeting methods are used by almost all organizations to help determine their decision in long-term capital projects. According to Schall, Sundem, and Geijsbeek, Jr, a 1978 survey reflected that almost all companies surveyed used one of the capital budgeting methods discussed in Chapter 24 (Payback, Accounting Rate of Return, and NPV; IRR is one also considered in the survey), with 86% of surveyed firms using more than 1 method (see source below).. Today, these methods continue to receive vast usage among organizations even in the midst of more advanced technological methods. A 2005 study by Apap & Masson looked at capital budgeting techniques utilized by publicly-traded utility companies, noting almost 73% of surveyed companies using one or more of the methods discussed (see source below).

Based on your knowledge gained in this unit, please address the following questions:

· Why are these methods so widely used?

· What are the advantages of using these methods?

· Which method do you think is used the most, and why?

· What other metrics could you analyze besides cash flows (or financial) when determining whether or not to accept a project?

The post needs to contain relevant terminology and a firm understanding of the capital budgeting methods being discussed in order to achieve the maximum number of points. space

Sources noted above:

Schall, Lawrence D., et al. “Survey and Analysis of Capital Budgeting Methods.” The Journal of Finance, vol. 33, no. 1, 1978, pp. 281–287. JSTOR, JSTOR, www.jstor.org/stable/2326365

Apap, Antonio, Masson, Dubos. “A Survey of Capital Budgeting in Publicly Traded Utility Comapnies.” Southwest Business and Economics Journal. http://www.cameron.edu/uploads/images/6024/A_Survey_of_Capital_Budgeting_in_Publicly_Traded_Utility_Companies.pdf

Capital budgeting methods are used by almost all organizations to help determine their

decision in long

–

term capital projects. According to Schall, Sundem, and Geijsbeek, Jr,

a 1978 survey reflected that almost all companies surveyed used one of the capita

l

budgeting methods discussed in Chapter 24 (Payback, Accounting Rate of Return, and

NPV; IRR is one also considered in the survey), with 86% of surveyed firms using more

than 1 method (see source below).. Today, these methods continue to receive vast

usag

e among organizations even in the midst of more advanced technological methods.

A

2005 study by Apap

& Masson

looked at capital

budgeting techniques utilized by

publicly

–

traded utility companies, noting almost 73% of surveyed companies using one

or more of

the methods discussed (see source below).

Based on your knowledge gained in this unit, please address the following questions:

·

Why are these methods so widely used?

·

What are the advantages of using these methods?

·

Which m

ethod do you think is used the most, and why?

·

What other metrics could you analyze besides cash flows (or financial) when

determining whether or not to accept a project?