Problems Students Face While Writing Capital Budgeting Assignment

Every firm or organization has to make investments in carrying out their business operations effectively and to ensure that all their investments are put to optimum use the management resort to capital budgeting. It is the process by which the company chalks out its long-term investment plans in terms of machinery, its replacements, chalking out strategies to architect new products, developing plans for constructing new plants, research processes, etc that are worth funding cash through the capitalization activity of the firm.

Capital budgeting is the process of acquiring fixed assets and capital investment for the projects. It is one of the most vital business decisions. It creates accountability and measure ability and enables the business to understand the risk factor involved in particular projects.

Further calculating capital expenditure enables the evaluation of new investment projects which are vital for any organization to compete in the industry. The main intention of capital budgeting is to make proper decisions. So it is vital to undertake this process before undertaking any large projects as there are chances of occurrence of fatal mistakes.

However, students face certain difficulties while writing academic assignments on capital budgeting such as:

• Complications: Capital budgeting requires lots of calculations and students often fail to understand the underlying concepts involved in it. This is because the concept touches a wide area.

• Selection of projects: The mission of capital budgeting is to select the projects that reap the most value to the firm. Students while doing assignments find difficulty in selecting such valuable firms for the projects.

• Tossing between mutually exclusive and independent projects: Students finds in deciding between mutually exclusive and independent projects. If the project meets minimum capital budgeting requirements then one should go for independent projects and the students find it difficult in deciding upon mutually exclusive and independent projects.

• Calculation of the payback period: It is the period of amount of time until the initial investment is recovered. Most students find difficulty in calculating this period. As cash flows are uneven it adds to complexities.

• Calculation of NPV or the net present value: This is the vital tool in the capital budgeting decision-making process. NPV projects the financial value of the project of the company. Calculation of net present value involves calculations that not all the students find easy to crack it.

• Estimating future cash flows: Deciding future cash flow is vital in capital budgeting as it enables the managers to decide whether the particular projects should be taken up or not. Students find it difficult to estimate the future cash flow of the project that is given for the assignment. Hence the majority of students resort to online assignment help in dealing with this topic.

However, with a proper understanding step by step process of capital budgeting, all the aforesaid concepts can be understood perfectly. It is vital for the students who find difficulty in writing the best assignments on capital budgeting to chalk out all the calculations involved in it perfectly and then proceed with other parts of the work. This will enable the students to get a crystal clear picture of the entire logic of capital budgeting.