Internal Rates Of Return Essay Example Pdf - Free Essay Example

Sample details Pages: 3 Words: 853 Downloads: 5 Date added: 2017/06/26 Category Finance Essay Did you like this example? Capital budgeting is the process of planning and evaluating investments in assets that have cash flows of periods greater than one year. These projects are classified as replacement decisions which are meant to maintain the profitability of a business and reduce costs. Capital budgeting is core to an organisation since the projects are always long-term. Don’t waste time! Our writers will create an original "Internal Rates Of Return Essay Example Pdf" essay for you Create order The Net Present Value (NPV) and Internal Rate of Return (IRR) approaches are commonly used in capital budgeting (Palepu, Healy Victor 2004). Comparison of NPV to IRR The NPV method uses cash flows estimated from each potential project. The present values of the cash flows are summed, to obtain the Net Present Value. The NPV decision rule is to accept projects with a positive NPV and to reject those projects with negative NPV, in an unlimited condition. In case the projects are mutually exclusive, the financial analyst accepts the project that has the highest NPV (CIMA, 2009). Internal Rate of Return (IRR) IRR is defined as the discount rate that equates the initial cost of a project to the expected net cash flows. In general, IRR is the discount rate that equates the net present value of a project to zero. IRR is generally calculated using trial and error method; formally it is calculated using financial calculators such as the BA TI Business calculator (Chanda, 2008). IRR decision rule First the financial analyst determines the required rate of return; which may be higher or lower than the firms cost of capital since it factors in the investment projects adjustments to financial risk. If IRR is greater than the required rate of return, finance managers accept the project. If IRR is less than the required rate of return, analysts will usually reject such projects since they reduce shareholders value (CIMA, 2009). The IRR approach advantage is that it clearly shows the return on capital. However, its main disadvantage is that, at times it may give contrasting results when compared to the net present value approach, especially for projects that are mutually exclusive. Another demerit of the IRR approach is the so called multiple Internal Rate of Return problem. This particular problem occurs when the investment projects lifetime cash flows are non-normal i.e. they are negative. This indicates that the project is running at a loss or the firm needs to invest more capital (Chanda 2008). Reason for NPV and IRR Methods giving conflicting appraisals When a project is classified as an autonomous project, i.e. the decision to invest in the project is independent of other projects, both the approaches of IRR and NPV will always give similar results, whether it is accepting or rejecting a project. In is true that NPV and IRR are resourceful methods for evaluating mutually exclusive projects. However, in cases where the decision favors one project to another, these metrics will not always give similar results, the reason being the timing of cash flows from each particular project. In addition, conflicting appraisals can be attributed to project sizes. Consider two projects, X and Y. Project X has an initial outlay of $1,000, and project Y has an initial capital outlay of $ 10,000. Project X (the smaller project) may give a higher IRR but a relatively lower NPV, but project Y may increase shareholders wealth (has a higher NPV) in as much as it will have a lower IRR (Chanda 2008). The NPV approach premises on the assumption that a projects cash flows can be reinvested to give a return on capital at the discount rate used in the calculation of NPV. In reality this assumption is rational since it is based on the notion that cash flows do actually reduce a firms investment capital needs. These funds allow firms to reduce capital requirements thus allowing firms to reduce their cost of capital. When a firm manages to reduce its equity and debt, it can actually earn on the cost of cash flow that are used to reduce its capital needs. On the contrary, if projects are to be ranked using IRRs, the analysts will be assuming that cash flows from the project could be reinvested at the IRR. This is not practical. If it were possible for a firm to earn the required rate on invested capital, then this rate should be used to discount the projects cash flows (Chanda 2008). Conclusion The above arguments proof that NPV and IRR are impeccable approaches used for appraising projects. However, in practice it is indicated t hat there are several other methods used for project appraisal. These include; the Payback period (PB) approach, the Average Accounting Rate of Return (ARR) approach and the discounted payback (DPB) method among several others. In fact the methods used by finance managers for capital budgeting vary due to four factors; Location- most European firms prefer the payback method to NPV and IRR; size-the firm-the larger the company the more likely it apply NPV and IRR methods; Managerial education-the higher their education level the more likely that they will use IRR and NPV methods; and finally, Private versus Public-Public firms- public firms are more likely to use NPV and IRR approaches while private firms prefer the pay back method.

Nursing A Career As A Career In Nursing - 705 Words

From a very early age I have had a passion and drive to help people. I was first inspired to go in to a nursing career by my grandmother who would tell me stories about her experiences as a midwife. One that stood out to me was when she travelled through a snowstorm to deliver a baby, and it is this level of commitment, care and compassion that I aspire to have. I have also found inspiration from my mum who is an ICU nurse and has always shared her experience and advice with me. This has been something that has resonated with me throughout my life and has always served as an inspiration. I have always enjoyed working with children, which is shown through my current job as a swimming teacher and my volunteer work. My chosen pathway is†¦show more content†¦After observing during work placements in hospital settings how to deal with challenging behaviour I feel I already have the foundations of the skills needed to work with distressed family members. I worked as a Poolside Assistant for Water Lilies Swimming School for over a year and have recently completed my STA Level 2 Award in Swimming Teaching, alongside the STA Level 2 Safety Award for Teachers and Safeguarding Children and Vulnerable Adults Certificate. I currently teach classes of up to 4 children from age 3-13; through this I have developed my confidence working with children, have increased my organisational skills through lesson planning and learnt valuable skills in communication with different children. I feel that the skills I have gained in helping a nervous child to feel at ease in the water will be very transferable to the skills needed to help a child feel comfortable in hospital. I believe that I possess the qualities in accordance with the NHS 6C’s; Compassion, Commitment, Competence, Care, Courage and Communication. I am very committed to my current job and have learnt how to balance this with both my college work and hobbies. Caring for the individuals in a care home on my current work placement has been something I have found very rewarding. I have high levels of compassion in myShow MoreRelatedThe Career Of Nursing As A Career In Nursing1614 Words   |  7 Pages Nursing is a very complex career that at many times requires one to be a leader. Nurses can be leaders in formal roles and also on the unit during any given shift. Nursing is a career that truly tests the character and attributes of those who choose to enter this career. Leadership in nursing is vital in creating a successful environment for patients. According to Stichler (2006), â€Å"effective leadership is essential to transforming organizations into environments that are safe f or both patientsRead MoreNursing : A Career As A Career In Nursing925 Words   |  4 Pagesgreat at and I have never recalled them because I was so focused on being in the medical field. 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Behavioral Science TV Character Evaluation Free Essays

Sigmund Freud’s chief contributions to the field of psychology are his investigations into the nature of the â€Å"unconscious† and the psychosexual development stages of human beings especially the infants. It was Freud who proposed that a crucial part of human development depends on the person’s ability to overcome or control his respective pleasures during the stage of infancy or childhood. The inability to control these pleasures, Freud claims, will certainly take their toll on the individual during the latter stages in life. We will write a custom essay sample on Behavioral Science TV Character Evaluation or any similar topic only for you Order Now On the other hand, Carl Rogers proposed that understanding human personalities and relationships require an approach that focuses on the individual rather than on the external environment that are presumed to influence people’s behaviors. He formulated a person-centered theory that is founded on at least nineteen propositions, all of which are tied to the general notion of treating the individual as the foundation of any inquiry into human personalities and relationships. His concept of a person who is able to function fully departs from other ideas in the sense that he does not discount the idea that even those things which we perceive as destructive can also contribute to the growth of the person. Finally, Carl Gustav Jung championed the idea that spirituality is an integral part of human development, even taking an important role in his concepts of therapy in curing an individual from both physical and emotional difficulties. He also focused on the concepts of the â€Å"archetype† as well as the anima and the animus, quite apart from his elaborate discussions on the concept of the â€Å"collective unconscious† and the â€Å"complex†. Moreover, he also espoused the concept of â€Å"individuation† as a way for an individual to realize his fullest potentials. How to cite Behavioral Science TV Character Evaluation, Papers

Catholicism in English Essay Example For Students

Catholicism in English Essay As Chinese culture defines that only elder members of society can talk knowingly about subjects in both organisational and social contexts, employees therefore do not respect or listen to young managers thus conflict arises and poor performance results (Mwaura et al, 1998). The concept of giving face manifests the Confucian aspect of Chinese culture as this can often lead to many problems arising both in a social context and business. Bond and Kwang (1986) argue that the significance of the face concept severely affects the ability of a Chinese manager to make decisions. As they tend to attach great importance to the views others hold about them more than in western cultures, Chinese managers therefore avoid actions that for them are high risk, or about which there is some uncertainty regarding the correctness of the outcome. This can lead to a breakdown in communication because if no employee is willing to take the responsibility for making a decision, effectively the decision just gets passed around until someone forgets about it and then the blame is passed on too. This would cause significant problems during negotiations or when trying to develop relationships with western companies because nothing would get agreed and eventually a lot of tension and frustration would be caused. However, this concept of giving face can be misunderstood and lead to conflict arising as other cultures do not understand its significance and find it fairly rude. For example, Mah (2001) recounts one occasion when a close friend thought she was giving face to the British mother of her future son in law by complimenting on her beautiful gems and asking, How much they cost? In Mrs. Wangs eyes, she was giving her close relative a big dose of mian zi (face). But to Lady Sutherland, her bold question was merely a vulgar invasion of her privacy. The significance of this is it highlights how the culture discourse influences peoples actions and how they can be misinterpreted. But an understanding of why people may act differently to what you may be used to will help explain certain behaviours and also highlight what is required in terms of establishing and maintaining strong business relationships. For example, the business practice of exchanging business cards carries more significant symbolic value in Japan than in other countries; it is a sign of respect and social etiquette (Cohen, 2002). By not following this process, conflict will arise within the relationship, as not following traditional formal greetings will immediately cause bad impressions. Conclusion As businesses become more international and far reaching, this paper has highlighted the importance of understanding cultural differences when attempting to create relationships, specifically between eastern and western companies. As demonstrated, communication between different cultures is often very difficult because of the differences in meaning making defined by language, and also due to the underlying beliefs and values that influence what is the cultural norm. Therefore to rectify this situation, and thus develop and maintain relationships, organisations must acknowledge the importance of culture and at least make some effort to appreciate that differences are present, and try to gain a degree of cultural literacy (Schirato and Yell, 2000), to be able to understand better the intricacies involved in retaining a strong cross-cultural relationship. Bibliography Books Baldwin. E, Longhurst. B, McCracken. S, Ogburn. M, Smith. G (1999) Introducing cultural studies, Prentice Hall, London Brown. A (1995) Organisational Culture, Pitman Publishing Cohen. L (2002) Language and Organisation: Course Pack Geertz. C (1973) The Interpretation of Cultures, Fontana Press Gudykunst. W (1998) Bridging differences: Effective Intergroup Communication, Sage, London Hartley. P (1993) Interpersonal Communication, Routledge, London Hofstede. G (1980) Cultures consequences: International differences in work related values, Sage, California Jackson. N and Carter. .uf91be42ad59070ac2f2fee273f6ecca4 , .uf91be42ad59070ac2f2fee273f6ecca4 .postImageUrl , .uf91be42ad59070ac2f2fee273f6ecca4 .centered-text-area { min-height: 80px; position: relative; } .uf91be42ad59070ac2f2fee273f6ecca4 , .uf91be42ad59070ac2f2fee273f6ecca4:hover , .uf91be42ad59070ac2f2fee273f6ecca4:visited , .uf91be42ad59070ac2f2fee273f6ecca4:active { border:0!important; } .uf91be42ad59070ac2f2fee273f6ecca4 .clearfix:after { content: ""; display: table; clear: both; } .uf91be42ad59070ac2f2fee273f6ecca4 { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .uf91be42ad59070ac2f2fee273f6ecca4:active , .uf91be42ad59070ac2f2fee273f6ecca4:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .uf91be42ad59070ac2f2fee273f6ecca4 .centered-text-area { width: 100%; position: relative ; } .uf91be42ad59070ac2f2fee273f6ecca4 .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .uf91be42ad59070ac2f2fee273f6ecca4 .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .uf91be42ad59070ac2f2fee273f6ecca4 .ctaButton { background-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .uf91be42ad59070ac2f2fee273f6ecca4:hover .ctaButton { background-color: #34495E!important; } .uf91be42ad59070ac2f2fee273f6ecca4 .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .uf91be42ad59070ac2f2fee273f6ecca4 .uf91be42ad59070ac2f2fee273f6ecca4-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .uf91be42ad59070ac2f2fee273f6ecca4:after { content: ""; display: block; clear: both; } READ: RIAA vs napster EssayP (2000) Rethinking Organisational Behaviour, Prentice Hall, Harlow, England Mah. A. Y (2001) Watching the tree, Harper Collins Publishers Mullins. L (1999) Management and Organisational Behaviour, 5th Edition, Pitman Publishing Schirato. T and Yell. S (2000) Communication and Culture: An Introduction, Sage, London Journal Articles Bate. P (1990) Using the culture concept in an organisation development setting, Journal of Applied Behavioural Science, Vol. 26 (1), pp. 83-106 Cohen. L and Musson. G (2000) Entrepreneurial identities: Reflections from two case studies, Organisation, Vol. 7 (1), pp. 31-48 Keenoy. T, Oswick. C, Grant. D (1997) Organisational Discourses: Text and Context, Organisation, Vol. 4 (2), pp. 147-157 Levitt. T (1983) The globalisation of markets in Harvard Business Review, May-June, pp. 92-102 Mwaura. G, Sutton. J, Roberts. D (1998) Corporate and national culture an irreconcilable dilemma for the hospitality manager? International Journal of Contemporary Hospitality Management, Vol. 10 (6), pp. 212-220 Watson. T (1995) Rhetoric, Discourse and Argument in Organisational Sense Making: A reflexive tale, Organisational Studies, Vol.16 (5), pp. 805-821 Contributions and Proceedings etc Books Atkinson. E (1990) Creating cultural change, Management Services, Vol. 34 (7), pp. 6-10 in Mullins. L (1999) Management and Organisational Behaviour, 5th Edition, Pitman Publishing De Beugrande. R (1997) The story of Discourse in Van Dijk. T (ed. ) (1997) Discourse as Structure and Process. Discourse studies: A multidisciplinary introduction, Vol. 1, Sage, London Mcgoldrick. P (1995) Introduction to international retailing in McGoldrick. P and Davies. G (Ed. ), International Retailing: Trends and Strategies, Pitman, pp. 1-13 Journal Articles Bond. H and Kwang-kuo. H (1986) The social psychology of Chinese people, in Bond. H (ed. ) The psychology of the Chinese people, Oxford university press, Oxford, in Mwaura. G, Sutton. J, Roberts. D (1998) Corporate and national culture an irreconcilable dilemma for the hospitality manager? International Journal of Contemporary Hospitality Management, Vol. 10 (6), pp. 212-220 Child. J and Markoczy. L (1993) Host country managerial behaviour and learning in Chinese and Hungarian joint ventures, Journal of Management Studies, Vol. 30 (4), pp. 612-29 in Mwaura. G, Sutton. J, Roberts. D (1998) Corporate and national culture an irreconcilable dilemma for the hospitality manager? International Journal of Contemporary Hospitality Management, Vol. 10 (6), pp. 212-220 Jones. P (1993) Studying society: Sociology theories and research practices, Sociology and Science, Collins Educational, London in Mwaura. G, Sutton. J, Roberts. D (1998) Corporate and national culture an irreconcilable dilemma for the hospitality manager? International Journal of Contemporary Hospitality Management, Vol. 10 (6), pp. 212-220.