Capital Budgeting: the process of planning for purchases of long term assets。 ° example Suppose our firm must decide whether to purchase a new plastic molding machine for $125.000. How do we decide? will the machine be profitable? Will our firm earn a high rate of return on the investment?
Top Creators of shareholder value 1999 invested cost of MVA capital return capital Microsoft3282571095456.16%12.64 Gen elect285,320652981929911.92 Intel
2 concepts that enhance our understanding of risk... 1) Operating Leverage affects a firm's business risk. 2) Financial Leverage affects a firm's financial risk