See details below Essay Example | Topics and Well Written Essays - 1250 words

See details below - Essay Example pp2-3) in which the project is either accepted or rejected based on its value addition to the firm and the shareholder wealth. The author showed that the cost of capital of a project is marginalized to maximize the shareholder wealth by including rate of interest, the required rate of return to stock holders, corporate marginal income tax rate, debt to equity ratio and lifetime of the proposed project and the weighted average cost of capital. In a paper written by the same author later (Beranek. 1980. pp404-405) claimed that the Net Present Value rankings of the investment opportunities do not match equity market value unless the projects are of one period duration or are solely equity financed. He established the widely used criteria of accepting a project only if its Present Value is greater than zero and recommended that the project among multiple Mutually Exclusive projects having highest Present Value should be chosen. However, Beranek (1975. pp17) warned of some practical chall enges in implementing this technique in capital budgeting due to uneven cash flows, non-straight line income tax & other depreciations, varying methods of repaying the debts, different treatment of shareholders between capital gains & dividends, errors in calculation of weighted average cost of capital in finite lived projects, etc. His fears were not unreasonable in those years given the current sophistication of capital budgeting procedures that takes into account complex metrics like risk analysis (both systematic & non-systematic), computerized simulations & stress tests, inflation, etc. In fact Pike (1984. pp95) carried out a broad level research on relationship between sophistication of capital budgeting and firm performance to conclude that higher sophistication of capital budgeting impacts firm performance negatively. Overall, Net Present Value has remained the most trusted method to evaluate capital budgeting decisions due to its shear advantage of evolving the "time value of money". Majority of expansions, new operations or replacement decisions are based on NPV technique (Sun & Queyranne. 2002. pp528). Although NPV has some pitfalls especially when the inputs to the NPV calculations (like interest rates, risk perceptions, etc.) vary considerably, it is the most effective technique to evaluate the true value of capital budget when evaluating the returns from a project. It may however not give a complete picture of returns from an accepted project and hence the Internal Rate of Return (IRR) technique should be used along with the NPV technique. Cash Flow Estimation under Capital Budgeting - Issues and Resolutions Most of the analysts associate larger risks with projects that are of longer durations. This is because the speculations of risks, interest rates, inflation, etc. become more unpredictable for longer durations. The NPV technique is perfect for a single duration project but if the inputs vary too much (like interest rates vary considerably within a short span of time), the project can no-longer be treated as single duration. Beranek (1980. pp404) presented an empirical

The effects of alcohol drinking Essay Example | Topics and Well Written Essays - 750 words

The effects of alcohol drinking - Essay Example This paper will elaborate on the noxious effects of drinking on physical health, mental and psychological well-being and education that later lead to adverse consequences to society as a whole. Effects of Drinking It should be pointed out that alcohol drinking among youths has increased tremendously in last 15 – 20 years primarily due to peer influence, excessive drinking of family members, portrayal of exaggerated images of fortitude / bravery of actors in movies, continuous persuasive and reminder advertising of alcohol beverages. Kremer and Levy (2008) have highlighted that frequent / occasional alcohol drinking is common among students who share similar rooms with other alcohol drinkers. Nevertheless, the academic performance of such drinkers is significantly lower in comparison to non-drinkers. Usually, students end up with poor grades and low CGPAs as an outcome of their drinking habit (addiction to alcohol). Drinkers are found addicted to life-threatening drugs and narc otics. The second most dangerous effect of alcohol drinking on youths is behavioral misconduct and aggravation of thinking and understanding abilities (Snyder et al, 2006). ... As a result, unwanted pregnancies and sexually transmitted diseases take place, which negatively affects health of male and female students. For instance, the situation becomes grave when male students get indulged in sexual harassment, ‘dating violence’ and physical abuse to their female counterparts, which then lead to disciplinary violations and lack of harmony within premises of educational institutions (Miller et al, 2006). Other serious behavioral issues with youth drinkers include carelessness / recklessness / wildness in driving and aggressive moves towards other students; the outcomes of which are nothing but grisly accidents (life-long disabilities and financial losses) and unnecessary (baseless and avoidable) combats between / among rival individuals / groups. The worst outcomes of frequent alcohol drinking (especially the case with addicts) include lack of emotional stability / control and obvious personality weaknesses, which then leads to ‘suicides an d homicides’ as highlighted by Duncan et al (2005). For instance, emotionally unstable (and drunk) youths when become hopeless at a certain point in their life then they commit suicides, thereby considering any unfavorable outcomes and events as an end of the world. Similarly, when drunk youths are unable to satisfy themselves through aggression and physically torture towards their rivals, they select homicide as an appropriate option and assassinate their enemies. Conclusion I would now like to end up this analysis by summarizing the facts that alcohol drinking is not only detrimental for a drinker’s mental and physical health but also may lead to conflicts among people, suicides and murders. Society, as a whole, is affected because emotionally