Description
1. Coyote and Bird run the Acme Fireworks Company and are trying to decide whether or not to purchase new equipment to streamline the production process. Coyote argues that they should use IRR as the basis for making the decision while Bird argues they should be using the NPV. They ask you, as the chief financial officer of the company your thoughts on the capital budgeting decision. What do you tell them?
2. A potential client (husband and wife) is exploring opening a new small business that will repair appliances and sell replacement parts. Inventory will not be significant. They are confused about a natural business year, fiscal year, calendar year, short year, accrual, or cash basis. How do you help them decide which is allowable and which might serve them best?
