How Non-U.S. MNCs Practice Capital Budgeting

Article Abstract:

Overseas capital budgeting has improved in United States multinational companies in the past twenty years. A survey of Western European and Japanese companies was done to determine practices. Foreign projects were found to have been less profitable over the past five years. Favorite capital budgeting tools are internal rate of return, payback period and accounting rate of return. Over sixty per cent measured foreign income in terms of cash flow. Tables are included.

Accounting and auditing, International business enterprises, Multinational corporations

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Abandonment Value in Capital Budgeting: Another View

Article Abstract:

Abandonment values should be considered in capital budgeting decisions. When cash flows are temporarily dependent the interaction of uncertainty and dependence with abandonment values must be considered. The use of a decision tree can help show optimal choices. Using periods other than a year may make its use less unwieldy. Some cases do not require abandonment consideration. Formulas and diagrams are included.

Models, Budget, Budgeting, Budgets

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Dangers in Discounting

Article Abstract:

Present value appears everywhere in accounting. Capital budgeting requires knowledge of the distorted time frame. This problem makes present value calculations hazardous for strategic planning. Tables and graphs are included.

Valuation, Discount (Finance)

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