Data Structure Dependent Control Flow †Free Samples to Students

Question: Discuss about the Data Structure Dependent Control Flow. Answer: Introduction There are various methods by which the managers can make a decision whether to choose a particular project or reject it. Most of the projects require huge amount of investments thus it is important that while choosing the correct project the managers must take correct analytical decision based on relevant factors rather than on vague ideas. This method of judging whether a project is financially viable or not is known as capital budgeting. It is a process by which the managers can evaluate the viability of a project and whether they should invest in the same or not. It takes into consideration the total expenses and revenue from the project and takes into consideration the total time value of money to reach to a particular conclusion with respect to a project. The prospective inflows and outflows are analyzed to understand whether there is potential revenue from the same or not. This process of capital budgeting consists of several method which are very helpful to the managers like p ayback period, discounted payback period, net present value, internal rate of return and profitability index and accounting rate of return. These methods are helpful in analyzing the potential of the project and are based on logical explanations rather than on any vague approach. Out of these methods there are two methods: NPV and IRR explained hereunder to have a clear idea about the usefulness of the same for the managers to take authentic and helpful decisions for the managers of the company(Linden Freeman, 2017).In case of Volkam the same has been explained and it has been said that companies all around the world put more focus on IRR than NPV though on paper NPV is a more prominent method(Volkman, 1997) Net Present Value Method is one of the most widely used method in case of capital budgeting. It is a major change in the wealth of the investor that occurs through the course of the project taking into consideration the expenditure and the revenue of the project and also taking the time value effect on the same. It is equivalent of the net cash inflows throughout the project reduced by the initial investment that the company makes in the same. It is one of the most reliable methods of capital budgeting and is most widely used given that it covers all the aspects. It takes discounted cash flow applying the rate of discount that is needed and that helps in getting the most viable result from the same(Trieu, 2017). It takes into consideration two inputs for the project, the net projected cash flows in successive periods after applying the discount rate and the hurdle rate which is the discount rate. Both these factors help in coming to a decision whether or not to invest in the project. After calculating the net present value of the project, if it is positive one must accept the project and if it is negative then the project must be rejected. In case of projects that are mutually exclusive projects that are having higher NPV must be selected(Guragai, et al., 2017). These are the standard methods for selection of the projects through the NPV method. It helps the manager in taking decisions whether they want to invest in the project or not. The formula for calculation of NPV consists of different ways when cash inflows are even and when cash inflows are uneven. The formula is stated below: Internal rate of return is another very widely used method that helps in ascertaining the viability of a particular project for the managers of the company. It is the rate at which the managers can equate the future cash flow of the project with the initial investment of the project, thus the total net present value of the project becomes zero. It is one of the most important techniques that is used in case of investment appraisal(Werner, 2017). The method of calculation of IRR is bit complex and requires a lot of technical analysis on part of the management of the company. When it comes to making the decision, the project must be accepted only if the IRR is not less than the target internal rate of return of the management. If the IRR is less than the project must rejected. In case of mutually exclusive project, the project that is having the highest value of IRR should be accepted. The formula for calculation of IRR consists of trial error method where the rate is calculated by the same. It is bit complex but it is very advantageous for the managers of the company. The formula for the same is stated: On the main context of this assignment it is a point of concern why the managers all around the world are opting for internal rate of return for ascertaining the value of the project rather than net present value method for the project analysis. The main difference between the two methods is stated below: The NPV method ascertains the result in dollar value and IRR helps in ascertaining the percentage return that the project is expected to create. The NPV methods focus on the surplus of the project and IRR focus on the break even cash flow of the project. The NPV methods helps in making better investment decisions on the basis of the present value of the investment of the company and IRR does not gives the present value return but only provides a rate in respect of the same. Hence if seen technically NPV is a better method for investment decisions in comparison to IRR(Trieu, 2017). The reinvestment rate is different in case of NPV in case of IRR and is easier to derive then IRR. The method of NPV requires the use of a discount rate and that is not easy to derive and requires the management to adjust it based on perceived risk level that the manager feels in the course of the project. There is no such risk in case of IRR and it is easy to derive and easier to analyze. NPV is an absolute measure for any project while IRR is a relative measure for the same project. NPV is easier to understand than IRR given the method of calculation of both the figures for any particular project of a company. These are the major differences between the two methods for the calculation of the required value of the project. Even though on paper net present is a more popular method and more adverse for the calculation of the net income from the project, but managers all around the world prefers IRR more. There may be many reasons for the same however the most common for this may be that calculation of net present value requires ascertainment of a discount rate for calculating the discounted cash flow from the project, and the managers also have to take into consideration the various risk factors that may be there(Linden Freeman, 2017). In case of IRR there are no such discount rates issues thus managers prefer this method as it helps them in ascertaining a particular ground where they can break even from the given project and get a solution out of the same. This is the most common method in case of capital budgeting and helps them in getting the best results for the same. The managers use the same to take decisions whether they should accept the said project to reject the project(Kew Stredwick, 2017). These projects will take in a lot of investments and thus it is important that these decisions are taken after a lot of analysis and taking into figures a lot of factors like the total cost of the project, expenses that are born throughout the project and net result from the same. NPV is a better method on paper and also helps in taking more concrete decisions but since it is based on time value and that is taken into consideration for the same. But as we know these time factors might keep fluctuating and thus there may be chances that there might be changes in the NPV of the project as and when the project closes(Bromwich Scapens, 2016). These are the few ways in which the method of NPV fails when it comes to providing accurate results for the validation of any project for the company and taking important decisions in respect of the same. The same has been stated by Volkam in his article highlighting the same. Thus even though this method is more accurate and more correct when it comes to literature and on paper but managers all around the world prefer using IRR as their preferred method for taking important decisions in respect of any project of the company and knowing whether or not to invest their money for the same. Both the methods have their own share of advantages and disadvantages and both are highly preferred when it comes to taking investment decisions for any project of the company. This is how the managers work and can also take expert decision in choosing which method they must apply to their project and its analysis. It will help them in taking good decisions(Dichev, 2017). Conclusion On the basis of the above analysis it can be said there are many techniques of capital budgeting that helps the managers in taking important decisions in respect of any project of the company. The most popular of the two are net present value method and the IRR method that are very widely used for calculation of the net income from any project and ascertaining whether it will be viable in the long run or not(Belton, 2017). Both have their own advantages and disadvantages but manager prefer IRR more than NPV because it does not include ascertainment of any rate and thus there is no assumptions involved in the same. Thus we see that both the methods are good in some way or the other but since calculation of IRR is easy in comparison to NPV the managers prefer the same(Abbott Kantor, 2017). There is less risk in calculation of IRR then in NPV. IRR gives better results than NPV as the time factor is not involved in the same. These are the few reasons why the companies and the managers p refer IRR as a method in comparison of NPV. But with advancement in financials and new approaches being discovered the managers are looking for newer and better methods that helps them in taking good decisions in case of project appraisal and determining whether or not to accept the same. Thus we can say that the managers must see which method suits the project most and choose that to ascertain its viability and to understand the relevance of the same(Alexander, 2016). The managers should also NPV in sync with IRR and use both the methods in combination so that there is no scope for the project to fail and the company gets the expected result out of the same. This is what can be concluded from this analysis that both the methods are good in their own ways and must be use accordingly as and when required so that there is no repent in the future in case of the same. References Abbott, M. Kantor, A., 2017. Fair Value Measurement and Mandated Accounting Changes: The Case of the Victorian Rail Track Corporation. 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