Q1TI Match the following business act... [FREE SOLUTION]

Chapter 26: Q1TI (page 1431)

Match the following business activities to the steps in capital budgeting process.
Steps in the capital budgeting process:
a. Develop strategies
b. Plan
c. Direct
d. Control
Business activities:
1. A manager evaluates progress one year into the project.
2. Employees submit suggestions for new investments.
3. The company builds a new factory.
4. Top management attends a retreat to set long-term goals.
5. Proposed investments are analyzed.
6. Proposed investments are ranked.
7. New equipment is purchased.

Short Answer

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1.	A manager evaluates progress one year into the project.	Control
2.	Employees submit suggestions for new investments.	Plan
3.	The company builds a new factory.	Direct
4.	Top management attends a retreat to set long-term goals.	Develop strategies
5.	Proposed investments are analyzed.	Plan
6.	Proposed investments are ranked.	Plan
7.	New equipment is purchased.	Direct

Step by step solution

Step 1:

A manager evaluates progress one year into the project- Under Control, subsequent to obtaining and utilizing the capital assets, companies compare the actual outcomes from the investments to the projected outcomes.

Step 2:

Employees submit suggestions for new investments- A plan is first to recognize potential capital investments.

Step 3:

The company builds a new factory- Under direct, the assets are utilized to produce income and contribute to company profits, and managers must direct the utilization of the assets.

Step 4:

Top management attends a retreat to set long-term goals- Developing strategies are the business's long-term goals, like expanding global activities or being a value leader in one market while channelizing into other market sectors.

Step 5:

Proposed investments are analyzed- The subsequent sub-step of the plan is to analyze the investments utilizing one or more capital budgeting techniques.

Step 6:

Proposed investments are ranked- In planning, capital rationing is the process of ranking and choosing among elective capital investments based on the accessibility of funds.

Step 7:

New equipment is purchased- Direct to acquire and utilize the capital assets selected in the capital rationing process.

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Net Cash Inflows
	Project L		Project M		Project N
Year	Annual	Accumulated	Annual	Accumulated	Annual	Accumulated
1	\) 100,000	\( 100,000	\) 200,000	\( 200,000	\) 400,000	$ 400,000
2	100,000	200,000	250,000	450,000	400,000	800,000
3	100,000	300,000	350,000	800,000
4	100,000	400,000	400,000	1,200,000
5	100,000	500,000	500,000	1,700,000
6	100,000	600,000
7	100,000	700,000
8	100,000	800,000

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Short Answer

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