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Myra Ltd., manufacturing televisions, is planning to expand its business and requires Rs 250 crore for the same. A number of projects are available to the company to invest in and each project has to be evaluated carefully. The Finance Manager of the company, has assessed the projects in terms of the rate of return from each project and wanted to select the one with the higher rate of retum. But, before selecting the project he has to take into consideration other factors also.
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Question : 17
Total: 18
Identify and state the financial decision discussed in the above paragraph
Solution:
The Finance Manager of Myra Ltd can take an investment decision and particular capital budgeting decision which involves determining the type and amount of assets that the firm requires in the long-run for allocation of suitable funds. One of the factors in capital budgeting considered by the finance manager of Myra Ltd is selecting one of the various projects providing the highest return on investments through possibly an appropriate appraisal method.
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