Managerial Accounting Essay Example | Topics and Well Written Essays - 750 words - 3

Managerial Accounting - Essay ExampleThe give the sack yearly cash flows were $560,000. The total net cash flows were $3707368. The initial apostrophize of $3.3 million were subtract from the accumulative cash flows to arrive at the present apprise. At a net present value of $407368 the project should be accepted.The net present value of the project was -$393872. The inflows of the project were the revenues of $660,000. The outflows of the project were the taxes of $264,000 and the yearly cost of $100,000. The new cash flows were $296,000. The project was discounted at an interest rate of 8%. The cumulative net cash flows of the company were $2906128. The initial cost of $3.3 million was subtracted to arrive at the NPV of -$393872. The project should be rejected beca part the NPV was negative.Subjective factors affect the decision fashioning of projects. In this example a subjective factor that could affect the decision is whether or not the sales forecast is reliable. Another su bjective factor that should be considered is the selection of the contractor to build the lift. The company should choose a contractor with a reputation of doing quality work to ensure that the 20 year reusable life is reliable.Economic value added or EVA is a measure of a companys financial performance based on the residual wealth calculated by deducing cost of capital from its operating profits (Answers, 2011). The metric is often also referred to as economic profit. The formula to calculate economic value added is net operating profits after taxes (NOPAT) minus capital multiplied cost of capital NOPAT (capital * cost of capital). EVA measures the surplus value created on an investment. Four advantages associated with the use of EVA areThe balance scorecard consists of an integrated set of performance measures that are derived from the companys strategy and support the companys strategy throughout the organization (Garrison & Noreen, 2003). The tool is very effective at achievin g the