FIN 571 Week 6 - DQ - 7645

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Cite and briefly discuss six areas to look for options that might be connected with a firm’s capital budgeting opportunities

Capital budgeting is a process of planning expenditures incurred on assets whose cash flow is expected to range beyond one year. In other words, it is defined as a process that requires planning for setting up budgets on projects expected to have long-term implications. It can be used for processes such as the purchase of new equipment or launching of a new product in the market. Businesses prefer to intricately study a project before taking it on, as it has a great impact on the company's financial performance. Some of the projects that use capital budgeting are investments in property, plants, and equipment, large advertising campaigns, and research and development projects.

I have found some ways to look for alternate funding for your business, we should start from the basics:

1. savings account- Entrepreneurs often take money from their savings for initial startup funding. When you use your own money, you don’t have to worry about paying anyone back right away.

2. Family- Interest rates are often lower and terms can be much more flexible.

3. network.-Friends, mentors, business associates, and other people who are in your network can also be considered viable options.

4. Angel investors-  Also known as strangers with money, angel investors use their cash to help aspiring entrepreneurs like you get started in business.

5. Government grants - In most cases, these grants are reserved for non-profits and other businesses that provide some sort of public benefit.

6. social lenders and banks - Also known as social finance companies, social lenders match borrowers who need money and investors who are looking for a fixed rate of return. Some of these lenders are backed by credit unions and other institutions.

 

 

Reference:

Studenomics (2010). 10 Places to Find Startup Fundings for your Business. Retrieved June 2, 2010 from http://studenomics.com/entrepreneurship/10-places-to-find-startup-funding-for-your-business/

 

 

Explain the ideas behind the percent of sales forecasting method.

The percentage of sales method is a system a company can use to anticipate changes in its balance sheet and income statement during the next time period it would like to review. Significant accounts used in this calculation are converted to a percentage of sales. That percentage is then used to multiply the forecasted sales volume for the next time period for each account to estimate its future total. The percentage of sales method is commonly used to project changes from one year to the next based on anticipated sales. It can also be used for quarterly projections as well.

 

Reference:

eHow (1999-2010). How to use the Percentage of Sales Method. Retrieved June 2, 2010

Solution Description

Cite and briefly discuss six areas to look for options that might be connected with a firm’s capital budgeting opportunities

Capital budgeting is a process of planning expenditures incurred on assets whose cash flow is expected to range beyond one year. In other words, it is defined as a process that requires planning for setting up budgets on projects expected to have long-term implications. It can be used for processes such as the purchase of new equipment or launching of a new product in the market. Businesses prefer to intricately study a project before taking it on, as it has a great impact on the company's financial performance. Some of the projects that use capital budgeting are investments in property, plants, and equipment, large advertising campaigns, and research and development projects.