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You're a recent graduate of Champlain College and landed a great job in New York as...

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Accounting

You're a recent graduate of Champlain College and landed a greatjob in New York as a junior financial analyst for Chuck Schwable, aleading investment firm whose name bears no resemblance to a wellknown investment firm. Schwable has recently been hired by Giggle,a leading IT corporation, to provide some capital budgetingrecommendations for a major building project in downtown Manhattan.This is it...it's your big chance to make a great first impressionand show off the skills you gained in your MGMT 240 financeclass.

The senior financial analyst in your office asks you to provide ageneral synopsis of three common capital budgeting techniques:NPV, IRR, Profitability Index, and the PaybackPeriod. Your synopsis will be presented to a small groupof very important Giggle stakeholders who know nothing aboutcapital budgeting.

For your synopsis (use fictitious data, if applicable):

  1. Describe each technique and how it pertains to making capitalbudgeting decisions
  2. Explain the benefits each technique has

Answer & Explanation Solved by verified expert
4.4 Ratings (653 Votes)
NPV Net present value method Net present value is a method to analyse profitability of the investment decisions It deals with finding the present value of future earnings from an investment The formula to find the net present value is present value of cash inflows minus present value of cash out flow if the the NPV is positive then investment decision is acceptable The present value is found out by multiplying the annual cash inflows or outflows by the present value factor Example Mr A invests 100000 to earn 12000 every year for 5 years and the cost of capital is 10 Year Annual Cash Flows Present Value Factor 10 Present value of    See Answer
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