CAPITAL BUDGETING IN UNCERTAINTY
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Transcript of CAPITAL BUDGETING IN UNCERTAINTY
CAPITAL BUDGETING IN UNCERTAINTY
Capital budgeting Capital budgeting is the planning process used to determine whether an organization's long term investments such as new machinery, replacement machinery, new plants, new products, and research development projects are worth the funding of cash through the firm's capitalization structure.
INTRODUCTION
What is the difference between risk and uncertainty
what methods are use un uncertainty How can decision makes effective
Risk and uncertainty both refer to situation with more than one outcomes.
Financial risk associated with a project's funding and
how the earnings distributed to investors determine the company's cost of capital (discount rate ).
Business risk that relates to the variability of future
cash flows arising from an investments fundamental characteristics , as we as changing economics conditions.
Dysfunctional risk methodologies