Respond to two different students in two separate paragraphs. Each paragraph should have 2 sources. Please message if you have any questions. I will provide the orginal discussion question, my response that you wrote and the two students you will need to respond to. Example response: John Doe I agree with your discussion post…….
Only thing I would add as a challenge for you = bring your responses to others alive ending your thoughts with a question. This helps to drive the curiosity of others to your threads lighting a spark + fueling conversation
Discussion Post
Aligning Strategy and Budget
In Chapter 9 of The CFO Guidebook, we are introduced to the tools of capital budgeting. Making specific reference to what you read in that chapter, respond to the following questions:
• Which metrics and methodologies are the most useful when evaluating a capital investment? Why?
• How can finance leaders be more effective partners to managers and business leaders in developing capital budgets that align with the risk tolerance and mission of the organization?
• What can be done to make sure everyone understands the connection between the strategy and the capital budget?
My discussion response
Aligning Strategy and Budget
• Which metrics and methodologies are the most useful when evaluating a capital investment? Why?
• The payback period methodology is the most appropriate for evaluating capital investments for firms. The approach estimates the time to acquire a significant return for a business entity to receive an initial investment (Gitman, 2017). Hence, the payback period triangulates the operation region when a project execution reaches a break-even point. Since the cash inflow utilized in the approach does not account for the present value, it ignores the time value of money.
• The payback period is advantageous over the other methods since it is easy to understand. The lesser the time spent by a company to conceptualize its return on investment, the lesser the risk a company bears since it expects a higher profit (Michelon et al., 2020). The calculations involved in the payback method approaches are straightforward, which thus minimizes the occurrence of errors. The short-term forecasts guaranteed by the methodology are highly reliable, and their fluctuation rate is minimal.
• How can finance leaders be more effective partners to managers and business leaders in developing capital budgets that align with the risk tolerance and mission of the organization?