Imagine you are the consultant who has to recommend whether to purchase Anheuser-Busch.
Determine the rate of return you could expect from your investment and the method you would use to evaluate the investment decision. Assess the disadvantages and advantages of each investment method located in Case 4 of Graduate Accounting Capstone Cases and choose the one that would provide the most accurate measure for your anticipated rate of return requirement. Justify your recommendation
DQ#2. The payback method is often criticized because it ignores the time value of money and cashflows after the payback period
has been reached. How could a simple payback calculation be used to compare with projects that have been evaluated by using
the net present value method?
DQ#3 A post-audit of a long-term capital project is very important. Who should conduct this review? Should managers of the
project being reviewed always be held responsible for cost overruns?
DQ#4 Capital budgeting decisions are among the most important decisions facing business entities. Suggest one
specific milestone needed to evaluate the performance of a capital project. Suggest some ways to hold managers
accountable for spending overruns.
