All categories

2 years ago

Budgeting is the process of planning future business activities and expressing them as?

1 answer:

7 0

From the explanation below, budgeting is the process of planning future business actions and expressing them as a <u>formal plan</u>.

<h3>What is budgeting?</h3>

Budgeting is the process of planning future business actions and expressing them as a formal plan.

Budgeting is said to be expressed as a formal plan because it provides a framework for the financial goals of a company, usually for the following three to five years.

Therefore, budgeting outlines how the formal plan will be executed periodically, taking into account things like revenue, expenses, reduction in debt, and future cash flow.

Learn more about budgeting here: brainly.com/question/18803390.

#SPJ1

You might be interested in

What is the present value of the future cash flows, if you also could earn $110,000 per year rent on the property? The rent is p

dem82 [27]

Answer:

a. The present value of the sales price is $1.657 million.

b. No. This is because an investment in the property will result in a negative net present value (NPV) of $0.443 million.

c-1. The present value of the future cash flows is $2.122 million.

c-2. Yes. Yes. This is because an investment in the property will result in a positive net present value (NPV) of $0.022 million.

Explanation:

Note: This question is not complete. The complete question is therefore presented before answering the question as follows:

You can buy property today for $2.1 million and sell it in 6 years for $3.1 million. (You earn no rental income on the property.)

a. If the interest rate is 11%, what is the present value of the sales price? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)

b. Is the property investment attractive to you?

c-1. What is the present value of the future cash flows, if you also could earn $110,000 per year rent on the property? The rent is paid at the end of each year. (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)

c-2. Is the property investment attractive to you now?

The explanation to the answers is now provided as follows:

a. If the interest rate is 11%, what is the present value of the sales price? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)

The present value of the sales price can be calculated using the simple present value formula as follows:

PV = FV / (1 + r)^n ……………………….. (1)

Where;

PV = Present value of the sales price = ?

FV = Future value or the sales price in 6 years = $3.1 million

r = interest rate = 11%, or 0.11

n = number of years = 6

Substitute the values into equation (1), we have:

PV = $3.1 / (1 + 0.11)^6

PV = $3.1 / 1.11^6

PV = $3.1 / 1.870414552161

PV = $1.65738659187525 million

Rounding to 3 decimal places, we have:

PV = $1.657 million

Therefore, the present value of the sales price is $1.657 million.

b. Is the property investment attractive to you?

No. This is because an investment in the property will result in a negative net present value (NPV) of $0.443 million.

The negative net present value (NPV) of $0.443 million is determined as follows:

NPV = Present value of the sales price - Acquisition cost = $1.657 million - $2.1 million = -$0.443 million

The present value of the future cash flows can be calculated using the following steps:

<u>Step 1: Calculation of the present value of the $110,000 per year rent</u>

Since the rent is paid at end of each year, this can be calculated using the formula for calculating the present value of an ordinary annuity as follows:

PVR = P * ((1 - (1 / (1 + r))^n) / r) …………………………………. (2)

Where;

PVR = Present value of yearly rent = ?

P = Annual rent =$110,000

r = interest rate = 11%, or 0.11

n = number of years = 6

Substitute the values into equation (2) to have:

PVR = $110,000 * ((1 - (1 / (1 + 0.11))^6) / 0.11)

PVR = $110,000 * 4.23053785373826

PVR = $465,359.163911209

Converting to million and rounded to 3 decimal places, we have:

PVR = $0.465 million

<u>Step 2: Calculation of the present value of the future cash flows</u>

Present value of future cash flows = Present value sales price + Present value of annual rent ……. (3)

Where;

Present value sales price = $1.657 million, as already calculate in part a above

Present value of annual rent = PVR = $0.465 million

Substituting the values into equation (3), we have:

Present value of future cash flows = $1.657 million + $0.465 million = $2.122 million

Therefore, the present value of the future cash flows is $2.122 million.

c-2. Is the property investment attractive to you now?

Yes. This is because an investment in the property will result in a positive net present value (NPV) of $0.022 million.

The positive net present value (NPV) of $0.022 million is determined as follows:

NPV = Present value of tof the future cash flows - Acquisition cost = $2.122 million - $2.1 million = 0.0219999999999998 million

Converting to million and rounded to 3 decimal places, we have:

NPV = $0.022 million

6 0

3 years ago

If businesses follow regulations, financial disasters are far less likely.

lys-0071 [83]

Answer:

True

Explanation:

All businesses, regardless of type or size, must abide by statutes and regulations. Laws comes from all levels of government. Some laws apply to specific sectors, but the majority addresses the entire industry.

Regulations deal with business registration, licensing, and employee compensation. Laws related to professional bodies such as lawyers or doctors must be adhered to by relevant businesses. Governments impose regulations on taxation, statutory deduction, and safety in the workplace.

Following regulations protects the customers, employees, and businesses. An employee who follows the law knows what is expected of them. Following rules will save the company from lawsuits. Employees will feel confident and motivated when they work for a company that follows the law.

Not following the law will cause problems with the tax authorities. It may lead to misrepresentation of financial records or expose employees to hazardous work environments. Such a business will most likely face may lawsuits that come along with huge costs. Not following the law may lead to the collapse of a company.

6 0

4 years ago

Spence wants to have $176,000 in 7 years. He plans to make regular savings contributions of $13,100 per year for 7 years, with t

Contact [7]

Answer:

$11,098.94

Explanation:

first we must calculate the future value of the 7 year annuity:

FV of an annuity = p x {[(1 + r)ⁿ - 1] / r}

p = $13,100
r = 17.18%
n = 7

FV of an annuity = $13,100 x {(1.1718⁷ - 1) / 0.1718} = $13,100 x 11.8377 = $155,073.56

since he wants to have $176,000, he needs $20,926.44 more in 7 years (= $176,000 - $155,073.56)

X = FV / (1 + r)ⁿ

future value =
n = 4 years
r = 17.18%

X = $20,926.44 / 1.1718⁴ = $11,098.94

5 0

3 years ago

A pharmaceutical company in Belgium decides to expand into additional markets. It conducts research and decides to focus on mark

stepladder [879]

Answer:

C) standardization strategy

Explanation:

standardization strategy can be regarded as one whereby a business owner or firm give same treatment to the whole world as if it's just one market that have just small meaningful variation It's base on an assumption that needs of people can be met with a product.

7 0

3 years ago

A communication plan is a key component for giving guidelines on how to track project:________a. Issues.b. Costs.c. Defects.d. B

AfilCa [17]

Answer: a. Issues

Explanation:

A Communication plan for a project allows for easier information flow between the stakeholders in the project including the client, the company and the workers.

By setting standards on how and what should be communicated the plan will let the stakeholders know how to communicate any issues affecting the project. The plan will also let the stakeholders know how to track issues that will be reported.

3 0

4 years ago