--%>

Capital budgeting analysis

State some of the problems which may enter into capital budgeting analysis in case project debt is computed rather than borrowing capacity made by the project?

E

Expert

Verified

If the project debt is greater as compared to the borrowing capacity formed by capital project, and tax shields on actual new debt which are used during the analysis, APV will be overstated forming the project appear more attractive than it actually is.

   Related Questions in Financial Accounting

  • Q : What is Internal Communication Internal

    Internal Communication: Employee or Organizational Communication refers to the phenomenon of interaction among employees that exist in organizations. In other words, it could also be termed as Internal Communications.

    Q : Payment method-Buy pound or investing

    When you have visited the London, you have purchased a Jaguar for £35,000, which is payable within the three months. Enough cash is there at your bank in the New York City that pays 0.35% of interest per month, compounding monthly, to pay for car. Presently, spo

  • Q : Define Financial Calculator Financial

    Financial Calculator: A financial calculator is an electronic calculator which executes financial functions commonly required in business and commerce communities.

  • Q : What is Subsidiary bank State what is

    State what is meant by Subsidiary bank.

  • Q : Cash Discount State the definition of

    State the definition of Cash Discount?

  • Q : Interest rate Give me answer of this

    Give me answer of this question. The prime interest rate usually: A) rises when the Federal funds rate rises. B) rises when the discount rate falls. C) falls when the Federal funds rate rises. D) falls when the Fed sells bonds in the open market

  • Q : Investors investing within the lion’s

    Explain why do investors invest within the lion’s share of their funds within the domestic securities?

  • Q : Identification of Responsibility Centre

    Identification of Responsibility Centre: Profit centre has been taken as the responsibility centre. Profit centre is the one in which both the revenue and costs are accounted for. The difference between them is the profit so the managers for this cent

  • Q : Goal programming model Write an article

    Write an article on Goal programming model to address the selection of the best group of quality control instruments in designing a quality control system for service organizations.