Full duration Research Paper
A survey of hood budgeting techniques used by listed mining companies in mho Africa
Vongai Maroyi and Huibrecht Margargontha van der Poll*
University of southeastern Africa, Pretoria, South Africa.
Accepted 23 July, 2012
Capital budgeting is crucial in the maximisation of shareholder value as it depends on the capital budgeting decisions made by the managers. The capital budgeting techniques used by South African mines listed on the Johannesburg Securities Exchange (JSE) and the reasons behind their use were investigated. Questionnaires were conducted during the plosive consonant of March to May 2011 to gather data. The results also indicated that the net bring in value (NPV) (69%), the internal rate of return (IRR) (46%) and the requital closure (PB) (23%) are the most common techniques used to evaluate major projects. The main reason for the use of the NPV was its superiority as it accurately takes into account the time value of money.
The IRR method is used owe to its ability to rank projects and to indicate the actual return of apiece project, thereby informing managers whether an investment will increase the societys value. The results indicated that the continual use of PB was based on the simplicity of the technique. Financial officers (FOs) should also make use of early(a) techniques for example, discounted payback period (DPB), profitability index (PI) and the real options which are of valuable in determining the feasibility of projects. Key run-in: Capital budgeting techniques, net present value, internal rate of return, payback period, mining companies, South Africa. INTRODUCTION Based on the fast change in technology, successful mining companies may destiny to be strategically positioned to take advantage of the changes in operating...If you demand to get a full essay, order it on our website: Orderessay
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