Respond to the following in a minimum of 500 words:
You are a finance manager for a major utility company. Think about some of the capital budgeting techniques you might use for some upcoming projects.
Discuss at least 2 capital budgeting techniques and how your company can benefit from the use of these tools.
Compare your approaches to other students’ responses. How were they similar or different? Why might you use the different approaches shared by your classmates?
Submit your assignment.
FINCB/571: Corporate Finance
Comp 2/Module 4 – Reflection
Assignment Content
Financial Performance Evaluation
Write a response to the following in a minimum of 500 words:
You are writing a book on how to evaluate performance evaluation for a company. Think about some of the influences and measures of company performance that you read about in this module.
Explain the use of return on assets (ROA) and the price-to-earnings (PE) ratio in evaluating the performance of a company. Write about how to calculate ROA and PE ratio and how market conditions can affect these metrics.
Share the ROA and PE ratio for a company you are familiar with. What do these metrics tell you about the financial health of the company?
Submit your assignment.
Answer preview
The third technique is the Internal Rate of Return (IRR) which is also a discounted rate that makes the NPVs of all the projects’ cash flows equal to zero. IRR is complicated compared to the other two techniques, which are the payback and Net Present Value techniques (Mujahed & Elshareif, 2017). Software like excel that is programmed with features that can help in calculating the IRR of each project will be used. This IRR rule states that if the IRR of a project is higher than the minimal or the lowest required rate of return, which is the cost capital, then the investment or the project can be selected or pursued. The project with the highest IRR will be more desirable and will be implemented. One of the benefits of using the IRR method is that each projects’ entire economic life is considered by focusing on their profitability. This means
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