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A Note on Long-Term Capital Budgeting: Building a Discounted Cash Flow Analysis
內容大綱
This technical note provides introductory to intermediate accounting and finance students with an introduction to the construction of a discounted cash flow analysis. The scenario is a plausible and moderately complex “real-world” managerial decision of whether or not a business owner should purchase labour-saving farm equipment. This decision includes tax implications and long-lived assets. One of the greatest challenges that managers face is understanding exactly what type of problem they are facing. Before we can learn to invoke and apply the appropriate structure, we have to identify the essence of the problem. The next step is to identify the required information to make the right decision, after an appropriate framework has been applied.
學習目標
This note is intended for students with any academic background, including those with little or no accounting experience. It is written for students who are novices at using Microsoft Excel but have at least a minimal amount of fluency (e.g., basic functions such as opening a file, inputting text, simple computations such as addition, subtraction, multiplication). In areas where other skills are necessary, parallel notes are provided to introduce those skills. Rather than simplifying any of the nuance, we introduce a general and repeatable framework for giving structure to a broad range of discounted cash flow problems. We then guide students through the process of organizing and situating information within the structure (and identifying missing but important information).