Keflavik Paper Company Case Study Example | Topics and Well Written Essays - 2500 words

Keflavik Paper Company - Case Study Example These capital outlays may include a purchase of new machines, modernization of equipments or even introduction of a new product. The capital budgeting process involves commitment of funds by a company in order to receive cash inflows in the future (Baker, 2011). Since funds available for these purposes are limited and the investment opportunities are many, screening and thorough evaluation is the best way to establish whether a proposed project outlay meets a number of set standards for acceptance.Screening entails the process of grouping projects into categories of acceptable and those that are not acceptable. Then from the alternatives, a preference decision is made by selecting the best courses of actions. This procedure also ranks them in order of desirability (Baker, 2011). If this planning is ignored, and the company goes ahead to endorse investment projects without analyzing them, problems are bound to occur. a) Problems Related with Excessive Reliance on a Single Screening Technique.Keflavik Paper will rely on a number of screening and evaluation techniques in order to determine which project to add to their projects portfolio. There are various criteria, which they can employ to determine whether a particular project meets the requirement to invest funds to implement it. Most of these projects will include expansion and diversification investment decisions or even replacement and modernization decisions (Allen, 2010). These projects are aimed at increasing production and also improve operating efficiency and reduce cost. This is reflected in increased profits and where firm replaces obsolete assets with those that operate more economically. The capital budgeting decisions are quite important since their effects continue for many years and entails large amounts of money investments into projects. These resources invested are committed for a long period and it may become hard to mitigate the effects of poor decisions. Thus, the success or failure of the company may rely on a single or relatively few investment decisions (Allen, 2010). Erroneous forecast of requirements of the assets can have grave consequences. If Keflavik Paper Company invests too much into these projects, it may end up incurring unnecessarily high depreciation and expenses. As a result the company may end being less competitive and eventually lose market. Like any other company, Keflavik Paper has scarce capital resources and thus timing is of essence. The various investment decision rules or investment criteria are divided into two distinct categories. First, there are the discounted cash flow techniques, which include net present value, profitability index and internal rate of return. Secondly, there are non-discounted cash flow methods, which comprise criteria such as payback period (Clear, 2011). Non-discounted cash flow techniques can be used to identify the ideal project to include into the company project portfolio. However, these methods of project appraisal do not take into account the project time value of money. Over reliance on these criteria to selecting and screening of projects could cause problems to the company. Payback period criteria attempts to measure the time that a certain project will take into the future to recoup the cost invested into the project. To approve a project the company would have a maximum allowable payback period within its policies, within which investments projects are compared (Allen, 2010). Excessive reliance on pay-back-period as a screening and evaluation technique would result to development of a pool of projects that no longer benefit the company after some years of operation. This is because the criteria do not consider projects’

SpinozaBerkeley Essay Example | Topics and Well Written Essays - 1250 words

SpinozaBerkeley - Essay Example Infinite substance is indivisible in Spinoza's view. He argues that if infinite substance were divisible then it could either be divided into two finite parts or it could be divided into two equally infinite parts; both of them being impossible. This proves that there is only one infinite substance and Spinoza believes that to be God (13). Since God is infinite substance, every being in existence has its being in God and nothing can exist without God (9). He proves that God is infinite substance and that no other substance exists outside of God. Thus Spinoza claims that God is present in all things; God is omnipotent. Spinoza argues that the will is the same as the intellect and in God, intellect is actual. God can think of infinite number of things in infinite number of ways. This infinite intellect of God comprehends all of God's attributes. All ideas are present in the intellect of God and the human mind is a part of the infinite intellect of God (13). Therefore, Spinoza maintains that ideas are adequate and true as long as they refer to God and reflect the essence of God. He also maintains that ideas that logically follow from such adequate ideas will remain adequate as well. Since adequate ideas must necessarily represent the essence of God, the idea of any substance's actual existence must also come from God. In this case, the human mind must be capable of knowing God and God's infinite essence. Sp Spinoza explains that the human mind may have both adequate and inadequate ideas. Adequate ideas are subject to reason whereas inadequate ideas are subject to emotions. There are three primary emotions from which all other emotions are derived - desire, pleasure and pain. Desire may arise from either pleasure or pain, pleasure arises from a transition from a lesser to a greater state of perfection and pain from a transition from greater to lesser state of perfection. For Spinoza, perfection is reality and since is God is absolutely perfect, he is also absolutely real (14). Spinoza argues that knowledge of good and evil comes from awareness of what causes pleasure and pain. The greatest good of the mind and the greatest virtue it can hold is to know God. To act with virtue is to act with reason and freedom is the ability to act with reason. Freedom is the ability to act rationally and to control emotions; not to subject to emotions and make free undetermined choices. Spinoza agrees that all emotions need not conflict with reason. Emotions that compliment reason causes pleasure whereas pain is caused by emotions that conflict reason (12). Adequate ideas reflect the infinite essence of God and they are subject to reason. Acting with reason causes pleasure and spreads goodness to all. Inadequate ideas do not express the essence of God and thus, knowledge of evil is inadequate knowledge. Inadequate knowledge thus causes pain. According to Spinoza, reason can control emotions and to live freely one must not be in servitude to emotions. Reason is virtue and v irtue is the knowledge of God and thus, Spinoza proves that the better control one exhibits over one's emotions, the better one can understand God (12). In Spinoza's view, all ideas are found in god and only those ideas that truly reflect the essence and knowledge of God are adequate and only those ideas provide freedom to the human mind. Berkeley's book "Three Dialogues between Hylas and Philonous" is broken into three separate sections, or dialogues. Through the first dialogue he tries to