Capital Budgeting

Deliverable Length: 750-1,000 words

The President of EEC recently called a meeting to announce that one of the firm’s largest suppliers of component parts has approached EEC about a possible purchase of the supplier. The President has requested that you and your staff analyze the feasibility of acquiring this supplier. Discuss the following:

What information will you and your staff need to analyze this investment opportunity?

What will be your decision-making process?

Discuss and evaluate the different techniques that could be used in capital budgeting decisions.

Specifically, discuss how time value of money affects capital budgeting. Capital budgeting differs from regular budgeting in that capital budgeting is for large investment decisions like plant expansion. The regular budgeting is for your day-to-day operations decisions.

Which do you think EEC should use? Why?

…………………………….Answer preview…………………..

Making investment decisions requires an analysis and appreciation of a wide array of information with an ultimate goal of assessing the feasibility and suitability of the investment (Oprea, 2010). Feasibility relates to profitability while suitability refers to an organization’s capacity to properly manage the new opportunities. The investment herein referred to is about taking over another business. This kind of investment is usually very peculiar because one needs to assess why the said business is up for sale. Some of the reasons why a business enterprise can offer itself for sale is the proprietor……………………..

APA

951 words