Capital Budgeting Assignment Help

The lease is the contract between a lessor and lessee, who are owner and user of assets respectively. The main purpose of Leasing is to protect the organization from depreciation value of owned equipment. It is also helpful for the company in paying equity because it saves it from paying negative equity. Another purpose of this financing is a lower interest rate on the leasing loan in comparison of a bank debt (Megginson & Smart, 2008). According to the capital budgeting case study assignment help experts, Operational and financial leasing are two major types of leases. Operating lease is based on cancellable lease agreements for short period of time.

 

It provides instant service with more convenience. In this leasing option, lessor is responsible for maintenance and insurance. In addition, there is risk of obsolescence with the lessor due to short period and availability of option to cancel the lease. Financial lease is long term and non-cancellable lease contracts between lessee and lessor. It is used mostly for utilizing high cost assets. In this, lessee is responsible for maintenance and insurance of assets and bears the risk of obsolescence (Boobyer, 2003). Short term borrowing is the type of debt financing that involves fulfillment of financial obligations usually within a year. This debt option is used for financing working capital requirements and day-to-day operational activities of the business. Long term financing requires accomplishment of financial obligations more than one year.

 

It is useful for financing the business investments that possess longer payback periods (Akalu, 2003). For not-for-profit healthcare organizations, main primary sources of equity financing are internally generated funds, government grants, real estate sales, etc. Internally generated funds are the retaining earning of the organization from its operational activities. Organizations can sell their real estate property or any official medical building as equity financing. Government grants are also equity financing sources for non-profit organizations by the government, in which repayment is not expected from the recipient (Zelman, McCue & Glick, 2009). Capital budgeting process includes different stages such as project identification, evaluation, selection, execution and review. Project identification is initial stage of capital budgeting process, in which a proposal related to potential investments can be generated within the organization or outside of the organization. Project evaluation stage helps to analyze the profitability of various projects. Through this our assignment help experts says that, costs and benefits are evaluated to determine proper criteria to select the project (Baker & Powell, 2005). Next step is selection of appropriate project that is based on all capital budgeting decisions through different techniques. After selecting the project, funds are allocated for it and a capital budget is built in order to execute the project.

 

At last, project performance is reviewed by comparing actual performance with set standards of estimated budget. It helps to take preventive measures and improve the performance of the project in future (Besley & Brigham, 2008). There are three discounted cash flow methods such as net present value (NPV), internal rate of return (IRR) and profitability index (PI). NPV is a discounted cash flow method that shows the difference between present value of future cash inflows and outflows of any project. These cash flows are discounted at the company’s cost of capital. IRR is another discounted cash flow method that helps to determine a rate of return at which net present value of the project is zero. At this rate, present value of expected cash inflows equals to present value of expected cash outflows. PI is budgeting technique that presents an index of present value of future cash flows and initial cash outflows to select a proper project in order to make investment decisions (Ehrhardt & Brigham, 2010).

 

References Akalu, M.M. (2003). Projects for shareholder value: A capital budgeting perspective. USA: Rozenberg Publishers. Baker, H.K. & Powell, G. (2005). Understanding Financial Management: A Practical Guide. USA: John Wiley & Sons. Besley, S. & Brigham, E.F. (2008). Principles of Finance. USA: Cengage Learning. Boobyer, C. (2003). Leasing and Asset Finance: The Comprehensive Guide for Practitioners. UK: Euromoney Books. Ehrhardt, M.C. & Brigham, E.F. (2010). Corporate Finance: A Focused Approach. USA: Cengage Learning. Megginson, W. L. & Smart, S. B. (2008). Introduction to Corporate Finance. USA: Cengage Learning. Zelman, W. N., McCue, M. J. & Glick, N. D. (2009). Financial Management of Health Care Organizations: An Introduction to Fundamental Tools, Concepts and Applications. USA: John Wiley & Sons. Now you can get any time business assignment help and business Capital Budgeting Assignment Help of all topics. Our assignment helper are experienced assignment writing experts and can do short deadline assignment. You can e-mail or speak with us for assignment help at info@www.assignmenthelpexperts.com