The contemporary publishing world has quite changed over the few years due to internet revolution. Today an author does not need to visit a traditional publishing house to have his work published to gain audience. Instead, an author can create an ebook, place it on-line and taking advantage of the Internet gain wide audience. In this digital era, hard copy books are gradually being phased out by e-books as people embrace digital formats due to increased adoption of kindles and smart phones. Besides readership, e-books are currently used as marketing tools. Due to their gaining popularity and increased use in marketing, it is important for anyone with desire to increase readership and market audience to learn how to write an ebook.
Identifying a topic
The first step when writing an ebook is to identify a niche topic to write about like cookbook, a business topic, fictional topic or other areas of interest. It is important that an e-book author identifies a topic that will provide solution to an existing problem or a topic that is entertaining. For instance, an ebook author writing a fictional novel should choose a topic that is entertaining and will engage a reader to keep on turning pages.
Planning your schedule
E-books unlike conventional books should not consist of many words, a thriving ebook, for instance, can have words ranging from 10,000 to 25,000 words compared to a conventional printed book that may be made up of 100,000 to 200,000 words, thus writing a complete e-book may take a couple of weeks to a maximum of 2 months. Despite the low number of words, an e-book author need to carefully plan and stick to a given schedule to deliver the project within a given time-frame. Before the actual writing, the author needs to identify how many words to put daily in actual writing, the number of written words to deliver daily and the period it will take to do revision and editing of the written e-book. Successful ebook authors partly attribute successful ebook writing to well planning of an author’s schedule.
Post Writing Help
Once an author is through writing an ebook and s/he is satisfied that the final product is a masterpiece, s/he needs to engage in aggressive marketing of the ebook to get it to the potential customers and target audience. Success of an ebook author is measured by the sales s/he is able to generate from his final product; therefore, marketing of the final product can be considered as the final and most critical phase of creating a successful ebook. The final stage maybe a doubting task if the author lacks the requisite marketing skills to take the e-book to the market audience; therefore, it is important that an author seeks outside help to help him get the ebook ultimately sold.
Wednesday 17 June 2015
Monday 8 June 2015
Capital Budgeting Techniques- Discounting and Non-discounting Methods
Capital Budgeting Technique
Due to rapid changes in business environment, business enterprises face the challenge of choosing between existing projects and new projects given the finite resources. Therefore, business managers in allocating resources are required to evaluate and choose the most viable projects between existing operations and new projects. According to Maroyi & van der Poll (2012), business managers use capital budgeting as an appraisal method to choose capital projects, either existing or new, to allocate resources. Shim & Siegel (2008) describe capital budgeting as investment decision tools used by business managers to evaluate worthiness of pursuing certain long-term capital projects. Emery, Finnerty & Stow (2007) continues to assert that capital budgeting is an appraisal tool used by business managers to make decisions on equipment replacement, expansion and product development. In essence, managers use capital budgeting techniques to determine profitability and viability of expanding business, launching new products, replacing old equipments with new equipments.
Capital budgeting techniques use two methods, namely discounting methods and non-discounting methods. Discounting approaches are hinged on time value of money concept while non-discounting methods are not based on time value of money concept. Net present value and internal rate of return (IRR) are capital budgeting techniques that use time value of money concept. Emery et al., (2007) observe that profit index, accounting rate of return and payback period are capital budgeting techniques that use non-discounting methods. The choice of the method to use depends on management decision and the type of project.
Discounting Methods of Capital Budgeting
Net present value is a capital budgeting technique that uses discounting method and because it takes into consideration the value of money over time, NPV is considered a sophisticated appraisal method. In using the NPV, the capital budgeting technique requires projection of cash flow and their timing. Cash flows are then discounted using appropriate discount rate to obtain discounted value of future cash flow. The discount rate is mostly the weighted average cost of capital of the firm. Risky projects are discounted using a high discount rate while low risk projects are discounted using low discount rates. Emery et al., (2007) assert that the present value of future cash flows is compared with the required cash outlay. If cash outlay is greater than the present value of future cash flow, the project is not worth undertaking, thus abandoned. If present value of future cash flow is greater than the cash outlay, the project should be accepted (Baker et al., 2008). The method has various advantages, such as it considers cash flow, takes into consideration time value of money, considers risk of future cash flow and determines increase of firm’s value because of investing in the project. On the other hand, NPV suffers from numerous set backs, such as it is difficult to estimate future cash flow and it is difficult to estimate the cost of capital.
The internal rate of return is a capital budgeting techniques that take into consideration the time value of money in assessing the worthiness of undertaking a certain capital project. According to Baker et al., (2008) the internal rate of return is the discount rate that yields a net discounted value of future cash flows of zero. Therefore, the internal rate of return is the rate of return on investment for the firm. If the internal rate of return is greater than the cost of capital, the project should be accepted. However, if the IRR is less than the return the company requires, the project should be abandoned (Baker et al., 2008). Just like the NPV method, internal rate of return has advantages and disadvantages. The advantages of IRR are, IRR takes into factor the internal rate of return, uses all cash flow in assessing viability of a project and IRR is used to determine the value a project adds to the firm. On the other hand, IRR suffers from various setbacks such as IRR is subjective because it yields multiple rates of return, IRR assumes constant cost of capital and cash flows during the service life of a project and the benchmark rate that is the cost of capital is an estimate.
Profitability index is a capital budgeting technique that takes into consideration the value of money over time. Since business firms are faced with numerous project opportunities, business managers use profitability index to select the most profitable project from a number of projects. Profitability index is obtained by dividing the discounted value of future cash flows with the cash outlay. Investment decision is made based on the comparison of profitability index of many projects. For example, business managers will accept a project with the highest profitability index among numerous projects competing for capital (Emery et al., 2007). Advantages of profitability index is, it takes into consideration the time value of money, takes into consideration all cash flows to be generated during the service life of a project and is useful in ranking projects. Profitability index also suffers from numerous setbacks, such as the cost of capital used to calculate net present value of cash flow is an estimate and profitability index is not a good appraisal tool for mutually exclusive projects.
Profitability index= Non-discounting Methods of Capital Budgeting
Business managers use methods that do not take into consideration the value of money over time in determining viability and the worthiness of a project. The most commonly used non-discounting methods of capital budgeting are payback period and accounting rate of return (Shim & Siegel, 2008). Payback period measures the time it will take a business firm to recover its cash outlay in a capital project. According to Emery et al., (2007), the shorter the period, the desirable is the project. Payback period has a set of advantages that makes it desirable to use in investment appraisal. The advantages include payback period is easy to compute and it is a good measure of liquidity. However, payback period suffers from numerous setbacks that make it unsuitable for investment appraisal. The disadvantages are it does not take into consideration the value of money over time, it does not consider all cash flows because it ignores cash flows after payback period and it ignores the risks of a project.
Accounting rate of return, just like the payback period method, is a non-discounting method of investment appraisal. However, unlike the other methods, it uses net income or accounting profits instead of cash flows. Accounting rate of return (ARR) yields the return on investment of the company based on annual net income. According to Shim & Siegel (2008), accounting rate of return is simply a ratio of average annual net income to average initial investment. A project with an accounting rate of return higher than the required rate of return for the firm is accepted. Nevertheless, a project that has an accounting rate of return lower than the required rate of return for the firm is abandoned. Accounting rate of return has an advantage that, it is simple to compute. Baker et al., (2008) opine that accounting rate of return should not be used in isolation because it ignores the value of money over time and risk, it uses accounting profits instead of cash flows and it does not measure additional investment value a project brings to a firm.
References
Baker, R. Lembke, V. King, T. & Jeffrey, C. (2008). Advanced financial accounting. (8th Ed.). New York: McGraw-Hill Companies.
Emery, D. R., Finnerty, J. D & Stow, J. D. (2007). Corporate financial management. (3rd ed.). Prentice Hall International.
Maroyi, V. & van der Poll, H. M. (2012). A survey of capital budgeting techniques used by listed mining companies in South Africa. African Journal of Business Management, 6(32), 9279-9292.
Shim, J. K & Siegel, J. G. (2008). Financial management. (3rd ed.). New York: Barron’s Educational Series Inc.
Author Bio
The above post was written by Alen Owen. He is a custom dissertation writer with an ace academic writing website. For more posts on finance essays, management essays and economics essays visit http://www.expertwritinghelp.com/
Essay on Economic Recession
The following is a custom economics essay on the recent economic recession that hit the world in 2008.
Economic Recession
The world economy recently came out of the worst recession since the Great Depression of 1930, albeit some countries in the Euro zone region are still grappling with the vagaries of the economic recession and financial crisis that hit the region from the year 2007-2008. The Economic Recession of 2008 was caused by a housing bubble burst that occurred in 2006, as value for homes drastically plummeted below mortgage values, causing home owner immense loss of wealth. Siegel reports that Prof. Robert Shiller of Yale University found out that for a period of 61 years, 1945 through 2006, housing prices declined by an average rate of 2.84%; as a result of this low volatility in the housing market, a mortgage security was deemed as a diversified and secure portfolio of loans. The increased home prices was to act as a guard against the loan as the underlying collateral, home, would cover the principal amount in case a subprime borrower defaulted. Unfortunately, in the year 2006, housing prices reversed and instead of maintaining the historical rise plummeted resulting in huge losses to borrowers as they could only sell the houses below the mortgage loan value, resulting in foreclosure. The widespread foreclosure caused panic among banks that had bought subprime mortgage securities on the secondary market, as they were worthless. Banks grew wary of lending to each other for fear of exposure to the worthless assets; this led to the closure and nationalization of banks and other financial institutions as many institutions were declared bankrupt. These events led to the worst Economic Recession since the Great Depression of 1930.
Economic recession is triggered by a slump in GDP (Goss Domestic Growth) growth, which is a manifestation of a slowdown in industrial output, shrinking housing prices and unfavorable business and investment environment (Obiel). Due to these triggers, the effects of recessions are high unemployment rates, bearish stock market performance and increased layoffs. In a recent opinion article appearing in the Wall Street Journal, David Malpass who was a deputy assistant Treasury secretary in the Reagan administration, and currently the president of Encima Global LLC argues that the United States of America’s “Economic signals point to a 2013 Recession.”
Economic Recession in 2013
According to Malpass, the recently released data from the Commerce Department indicate that the United States of America’s economy is headed for a recession. The author based his argument on the fact that manufacturing order slumped by 13.2% in August and inflation adjusted personal income was down by 0.3%. Similarly, Mathews argues that a decline in manufacturing orders is an indication of imminent economic recession. Malpass disputes President Obama’s assertions that the US economy is on a recovery path and should be given more time to bounce back as the policy framework takes prominence. Malpass in his supporting arguments for a likelihood of Economic recession in the year 2013 observes that the economic policies being spearheaded by the Obama administration have discouraged private investments, eroded business confidence, diminished employment opportunities and shrank median incomes. Among the policies that have adversely affected the US economy include deficit spending, government control over the US economy and dependence on the US Central Bank to lend to the US government, thus discouraging private investments that create jobs. Malpass opinions that what defines the current economic times is fever for investing in government bonds and gold due to a reverse of American principles of growth and prosperity by the Obama administration. Maps continues to criticize Obama’s administration for adding to the national debt and the near zero interest rate regime perpetrated by the Federal Reserve meant to favor the government’s borrowing scheme at the expense of investors, mainly the private sector savers. The author, therefore, feels that the notion that the U.S economy should be given more time to fully recover is misleading, and the growth is hinged on excessive fiscal and monetary interventions, which is ineffective. Malpass observes that the real GDP has been falling, the unemployment level is still high, US credit rating is falling and national debt to GDP is escalating, therefore recession is imminent.
The US economy is facing bleak times despite Dow Jones Industrial Average and S&P 500 robust performance, other economic indicators point to a looming recession. However, the government continues to dispute these observations arguing that the slow growth witnessed post recession is because the recession was very deep. It is alarming to observe that even post recession economic growth is sluggish, growing slightly over 2%, the unemployment rate is above 8%, increased taxes and mandated government spending and the resumption of foreclosure, an indication that the economy is still out of the doldrums.
Conclusion
Although the S&P 500 and Dow Jones Industrial Average have hit highs previously witnessed pre-recession, the US economy is still struggling and the growth seems unstable, a recipe for a looming economic recession. For instance, economic growth is stunted, the unemployment rate is above 8% and the national debt is expanding, indications that the economy is on shaky grounds.
References
Malpass, David. Economic signals point to a 2013 recession. The Wall Street Journal, 28 September 2012
Obel, Mike. US is in recession, says noted economist; why the Obama economic recovery plan has faltered. International Business Times, 29 May 2013.
Siegel, Jeremy. Efficient market hypothesis. The Wall Street Journal, 27 October 2009.
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