Using your example of a capital budget from Week 4, prepare a break-even and sensitivity analysis using: 1) Cash flow, and 2) Present Value of cash flow. Compare the two results and explain this to your CEO in a follow up memo. In the memo, please explain why computing break-even is important for capital budgeting.
Comments by instructor:
Note the questions above. Please, answer them in the first page, then expand on the topic in two paragraphs on the second page. Come up with three questions to continue the conversation about these topics.
A note about references:
“The parent company concept emphasizes the interests of the parent’s shareholders. . . The economic entity concept emphasizes control of the whole by a single management “(Jeter & Channing, 2012).
Please note: when quoting from the textbook, please follow this citation example and then provide a formal reference below what you have posted. You quote items less than 40 words and indent quotes larger than 39 words. This is so readers know exactly what you have quoted. I will deduct points if you miss adding citations or references.
Jeter, D.C., & Chaney, P.K. (2012). Advanced accounting. New York: John Wiley & Sons, Inc.
ONLY use trust-worthy and authoritative references from United States since this is an Accounting class in US.