Capital Budgeting Techniques,Reflection This reflection is comprised of two sections, collectively totaling a minimum of 500 words. Complete your reflection by responding to all prompts.??????? Capital Budgeting Techniques You are a finance manager for a major utility company. Think about some of the capital budgeting techniques you might use for some upcoming projects. Discuss at least 2 capital budgeting techniques and how your company can benefit from the use of these tools. Compare your approaches to other students’ responses. How were they similar or different? Why might you use the different approaches shared by your classmates? Financial Performance Evaluation You are writing a book on how to evaluate performance evaluation for a company. Think about some of the influences and measures of company performance that you read about in this module. Explain the use of return on assets (ROA) and the price-to-earnings (PE) ratio in evaluating the performance of a company. Write about how to calculate ROA and PE ratio and how market conditions can affect these metrics. Share the ROA and PE ratio for a company you are familiar with. What do these metrics tell you about the financial health of the company?

Capital Budgeting Techniques

Capital budgeting is the process of evaluating and selecting long-term investments that are in line with a company’s strategic goals. As a finance manager for a major utility company, there are several capital budgeting techniques that we can use to evaluate potential projects. One technique that we frequently use is net present value (NPV). This approach involves estimating the expected cash flows of a project and discounting them back to present value using a discount rate that reflects the company’s cost of capital (Finance, 2019). This allows us to determine the value that the project is expected to create for the company in present-day terms. We find this approach to be particularly useful because it takes into account the time value of money and allows us to compare projects of different sizes and time horizons on a level playing field. Another capital budgeting technique that we use is the internal rate of return (IRR). This is the discount rate that results in a NPV of zero for a given project (Finance, 2019). Essentially, it represents the expected rate of return on an investment. We find this approach to be useful because it allows us to compare the profitability of different projects and helps us to determine which projects are likely to provide the highest returns. Cont…