The Payback Period as a Tool in Capital Budgeting Decisions Essay

The Payback Period as a Tool in Capital Budgeting Decisions - Essay Example In order to aid managers in making decisions with regards to capital budgeting, tools and techniques have been devised. One of these methods is called the payback method. The payback method is one of the most popular tools in conducting capital budgeting decision. The payback period tells the company the length of time required to recoup the original investment through investment cash flows. This is essentially the time when the company breaks even-the initial capital outlay is equal to the cash flows. For example, if a company invests $100,000 for the introduction of a new product line, then, the payback period reveals when the company will be generating cash flow of $100,000. Considering that the business organization invests in a project which generates the same level of cash flow annually, the payback period is computed as the follows: However, if the investment generates unequal annual cash flows, then the individual annual cash flows are subtracted from the initial investment until a difference of zero is reached. The year when cash flow equals investment is the payback period. Other things being equal, the investment with a low payback period is chosen as it implies less risk for the company. ... As the investment is recouped in a shorter period of time, it also indicates that the investment is less likely to fail. In the payback method, the profitability of the investment is often tied on how fast the investment generates cash inflow for the business organization. If the business organization is eyeing two or more projects to invest into, using the payback as sole decision criterion will make the company choose the project which has the lowest payback. However, if there is only one project to be evaluated, the firm often sets a specific span of time when the initial investment should be recouped. Generally, managers favor projects which have a payback period of less than three years. If the payback period is one year, the project is considered essential. In order to assess really understand how the payback period can be used in decision making, we will use it to evaluate two projects-one which has a fixed annual cash flow and one which generates unequal stream of cash flow. Suppose, XYZ Company is choosing between replacing its old machine used for production or embarking on a new product line. Each of the projects is estimated to require an initial investment of $100,000. Since the company is constrained with only $100,000 budget, the company must pursue only the more profitable option. The primary decision criterion used to evaluate investment decisions is the payback method. The estimated net cash flows are as follows: Year Replace Old Machine Introduce Product Line 1 $25,000 $10,000 2 $25,000 $20,000 3 $25,000 $70,000 4 $25,000 $50,000 5 $25,000 $50,000 A. Constant Annual Cash Flow The replacement of the old machine with the new one is forecasted to yield

CITI business case study Example | Topics and Well Written Essays - 1750 words

CITI business - Case Study Example Increased competition for capital continues to force banks to innovate (Citibank, 2008). In order to differentiate its e-business products from those of its competitors, Citibank took several measures(Citibank, 2008). First, the bank developed a strategy for its corporate banking division where its target corporate clients included multinational corporations (MNCs), financial institutions, government agencies, local enterprises and SMEs. The bank understood that each of these corporate client categories had unique needs. The bank realized to need to go the extra mile to package its products to meet the unique needs of every customer (Citibank, 2008). Citibank also differentiated itself and its products from those of its competitors through an improved, comprehensive customer service. The customer service includes telephone hotlines, relationship managers who take their time to comprehend the individual customer’s needs and product advisors whose role is to advise customers on the product or products that most suits its needs. Finally, the bank continues to invest heavily in technology in order to promote both the front- and back-end electronic banking systems. Besides, the bank seeks to make itself more accessible to its customers through what is calls its unified platform. The platform uses a teamwork approach that allows the bank to work with every function in the organization of the client (Citibank, 2008). Grow its global reach: As at the time of developing this strategy in 2008, Citibank had operations in 100 countries of the world and employed over 268,000 people. This global presence, the bank believes, puts it in a strong position to meet the global needs of its customers. This being the case, the bank should continue its global expansion drive. Strengthen its brand: The bank believes that it has built a strong brand

About Prometheus Bound Essay Example | Topics and Well Written Essays - 500 words

About Prometheus Bound - Essay Example When asked Prometheus denied Zeus the information he held regarding who it would be that threatened the throne of Zeus, so as punishment he was bound by shackles to a great rock. In Prometheus Bound (n.d.), Prometheus must come to terms with his own limitations in power, but demonstrates that Zeus has limits as well. Prometheus was a god, but felt he had little influence in the matters of the Gods. Prometheus, known as the teacher of all arts, suffered at least partially because of his aid to humankind. Prometheus was fond of humans and, wishing them to flourish, took fire from the gods and gave it to the people. The fact that Prometheus cared deeply about the human race was in strong contrast to how Zeus felt, and was a main point of disagreement between the two. Prometheus described Zeus’s feelings toward humankind when he stated, â€Å"It was his wish to wipe out man [sic] and rear another race† (Aeschylus 6}. For this reason, Prometheus defied the divinity and super ior knowledge of Zeus. If Prometheus were given absolute power, he would be ensured that tyranny would fall and justice reign supreme over the gods and the human race.

Consumer behaviour Assignment Example | Topics and Well Written Essays - 1250 words

Consumer behaviour - Assignment Example True to John’s case, he had a need for replacing the television he had lost due to burglary. He got an insurance compensation, and this; therefore, put him at the point of need to find another television set. Mr John explains that he could not imagine staying any longer in that state of boredom without getting a TV set, and this prompted him to think of how to capture one. Need recognition entails identifying the need, which he or she has to satisfy. This marks the beginning of the buying process. Notably, the identification of the need is the foundation of the buying process, since the customer has to satisfy an existing need. In this case, the desire to watch movies or TV programs was the process of the need recognition that led to the identification of T.V as the only thing that would satisfy the need to watch movies and programs and reduce boredom. Notably, need recognition is the most significant stage of the buying process because without a need there is no purchase. The second step involves the search for relevant information on the product identified that can satisfy the need. In this case, the customer looks around to identify the best product that would satisfy the need (Singh, 2007). Notably, the customer seeks for the best product in the market that would solve their problem. In this case, the search for relevant information would involve a search for information on TV sets from distinct manufacturers in the market. Most customers search for information through friends, relatives, adverts, the internet and catalogs and other booklets (Armstrong, 2009). In his response on whether he searched for various products before settling on Sony T.V, he acknowledged that he browsed the internet in search of different models and brands. He gave the reason for this as the fact that he did not want to buy the same model he had lost to burglary since its spare parts were not readily available at the local electronic shops.

Karl Marx's Estranged Labor vs. Adam Smith's Division of Labor Research Paper

Karl Marx's Estranged Labor vs. Adam Smith's Division of Labor - Research Paper Example While Marx sought to minimalize the effects of capitalism, Smith sought to emphasize the brilliance of the free market economy. Naturally, these two individuals’ ideologies clash, but there is value in both perspectives, as one shall soon see. Karl Marx’s ideas about estranged labor, Smith’s ideas about the division of labor, and a comparison of the two ideologies will be herein attempted. II. Karl Marx’s Estranged Labor Karl Marx identifies estranged labor as labor alien to man. Marx explains the condition of estranged labor as the result of man participating in an alien to his nature. It my interpretation that man is alienated from his labor because he is not the reaper of what he sows. Because he is never the recipient of his efforts, the laborer lacks identity with what he creates. For Marx then labor is alien to the worker and does not belong to his essential being. Marx identifies two explanations of why man’s lack of identity with labor leads him to be estranged from labor. The explanation that the laborer does not develop freely his physical and mental energy, but instead mortifies his mind, may extol the virtue of communism. In other words, labor fails to nurture man’s physical and mental capacities, and instead, drains them. Because the worker is denied any nurturing in his work, no intimacy between the worker and his work develops. Although, it’s very hard to see how working in a sweat shop in Communist China, for example, is creating intimacy with one’s work to the point that one is able to develop one’s energy freely. Thus, this quote â€Å"lack† of an intimate relation with what he creates, man is summarily estranged from his labor. Furthermore, labor estranges man from himself. Marx argues that the labor the worker produces does not belong to him, but to someone else. Given this condition, the laborer belongs to someone else and is therefore enslaved. As a result of being ensla ved the worker is reduced to a â€Å"subsisting animal,† a condition alien to him. As an end result man is estranged from himself and is, in his words, mortified. Marx points to these situations as the reason man is essentially estranged from his labor. The incongruence between the world of things the worker creates and the world the worker lives in is the estrangement. As the worker gives up his or her contribution to the work, he or she begins to lose importance to the work and the work becomes more superior to the worker. As this happens, the owner of the company or organization accumulates more wealth and power and is able to overcome competition and have more power over the worker. ? I find this to be true based on my personal experience when I worked for a logistics company as a shipping lead. The harder I worked, the more powerful the department became, hence the more powerful the company became—and the less important I became to the company and its superiors. T he department improved a lot under my leadership whereby it generated more revenue. The result was that the company became more important than the person—as stated by Marx in the above paragraphs. ? The worker becomes all the poorer the more wealth he produces, the more his production increases in power and range. The worker becomes an ever-cheaper commodity the more commodities he creates. According to Marx in Calhoun and Gerteis (2007), â€Å"On the basis of political economy itself, in its own words, we have shown that the worker sinks to the level of a commodity and becomes indeed the most wretched of

Living Together Before Marriage. A Good Idea Research Paper

Living Together Before Marriage. A Good Idea - Research Paper Example The paper explains why staying together before marriage is a good compatibility test. It   goes a bit further to explain it’s importance of testing the commitment level of couples before marriage. Short explanations are also stated in regards clarify beliefs of couples who during ttheir younger years their parents went through horrific divorce and left a negative dent pertaining to marriage. the paper will also explain the importance of staying together before marriage as a means of helping couples whose former relationships have been horrible and try and baby step them to overcome this past experience by staying together first. As the discussion highlights staying together before marriage is beneficial to love birds because it will help them   know if they are compatible. Compatibility saves couples from messy and brutal divorce that they have to go through if their marriage is not working. Staying together acts as a litmus test to deduce if the two lovers can stay together. Their commitment will be evident if they manage to solve   problems within a period of time, if not then its best for them to call it quits since this will save them litigation money, embarrassment and despair   that divorcing couples usually go through. Bill Maier, PH.D states â€Å" Living together is a good way to find out if couples are compatible-a sort of test drive that will determine your chances of marital success.†

Why Japan attack Pearl Harbor Essay Example for Free

Why Japan attack Pearl Harbor Essay Japan was at war with China. Despite being a military superpower, their war with China was using up their resources. During that time, most of their resources especially oil were coming from the US. The US did not approve of Japanese aggression in China and they declared an embargo on Japan. This means they would stop supplying Japan with raw materials. So where would Japan get their resources to continue the war now? The Japanese High Command carefully discussed this and came up with the conclusion that the Dutch East Indies would be the best place to gain resources. But they knew that an attack on the Dutch East Indies would probably bring the US into the war. So they had to find a way to prevent the US from fighting with them until they conquered the Dutch East Indies. Thats when they planned Pearl Harbor. The goal of Pearl Harbor was to disable the American fleet for a few months to give them enough time to conquer the Dutch East Indies and to absorb its resources to finance their war in China and the US once the US navy was rebuilt. The Japanese were tired of negotiations with the United States. They wanted to continue their expansion within Asia but the United States had placed an extremely restrictive embargo on Japan in the hopes of curbing Japans aggression. Negotiations to solve their differences hadnt been going well. Rather than giving in to U.S. demands, the Japanese decided to launch a surprise attack against the United States in an attempt to destroy the United States naval power even before an official announcement of war was given. The Japanese practiced and prepared carefully for their attack on Pearl Harbor. They knew their plan was extremely risky. The probability of success depended heavily on complete surprise. On November 26, 1941, the Japanese attack force, led by Vice Admiral Chuichi Nagumo, left Etorofu Island in the Kurils (located northeast of Japan) and began its 3,000-mile journey across the Pacific Ocean. Sneaking six aircraft carriers, nine destroyers, two battleships, two heavy cruisers, one light cruiser, and three submarines across the Pacific Ocean was not an easy task. Worried that they might be spotted by another ship, the Japanese attack force continually zig-zagged and avoided major shipping lines. After a week and a half at sea, the attack force made it safely to its destination, about 230 miles north of  the Hawaiian island of Oahu. On the morning of December 7, 1941, the Japanese attack on Pearl Harbor began. At 6:00 a.m., the Japanese aircraft carriers began launching their planes amid rough sea. In total, 183 Japanese aircraft took to the air as part of the first wave of the attack on Pearl Harbor. At 7:15 a.m., the Japanese aircraft carriers, plagued by even rougher seas, launched 167 additional planes to participate in the second wave of the attack on Pearl Harbor. The first wave of Japanese planes reached the U.S. Naval Station at Pearl Harbor (located on the south side of the Hawaiian island of Oahu) at 7:55 a.m. on December 7, 1941. Just before the first bombs dropped on Pearl Harbor, Commander Mitsuo Fuchida, leader of the air attack, called out, Tora! Tora! Tora! (Tiger! Tiger! Tiger!), a coded message which told the entire Japanese navy that they had caught the Americans totally by surprise.