FINANCIAL AND MANAGERIAL ACCOUNTING Research Paper

FINANCIAL AND MANAGERIAL ACCOUNTING - Research Paper Example This can be done using capital budgeting techniques like Net present Value, Internal rate of return, Payback period etc (Murray State University, n.d.). The future cash flows are discounted using the required rate of return to see if the project is profitable i.e. it gives ‘value for money’. Only if the project has a net positive cash flow i.e. there is a gain even after paying for the cost associated with the project, it is worth investing. The strategic planning involves integration of a company’s decisions with respect to future business activities which include capital investments and operational activities. The operational requirements can be evaluated by perusing the budget requirements (Sagner, p.114). With regard to the city project the operational requirement will require an adherence to the federal standards. This will help in raising the amount of total funds allocated towards the city project from the current level of $10 million to $20 million. A stra tegic plan involves using the set budget in the most efficient manner so that all the infrastructural needs of the city are taken care of, providing various economic incentives to the new private companies etc. This can be in the form of tax waiver for the first 10 or 15 years; giving funds at cheap interest rates; relaxing the regulatory norms so that the businesses can focus their attention only on the work related activities without having to bother about clearances from various bodies. However, this does not come for free as this will require setting up adequate departments to facilitate cordial operating conditions for the new businesses and fast-tracking certain activities. All this will require funds and so it is important that a proper plan is drawn as to assess the amount of cost that will go towards such activities. Besides it is important to assess the net impact of these investments from the financial as well as social point of view. Thesis Statement- The budgeted amount has to be spent in a way that it can result in an all around development and growth of the city. The local authority plans to allot this amount for infrastructure development, educational programs, creation of Special Economic Zones (SEZs) etc. Allocation for infrastructure development The population of the city is not very high. The city is distantly located from the country capital. The infrastructure of the city is not very developed which is perhaps the main reason that the city lacks a business set-up. To make the city attractive to the business community it is important that suitable infrastructure is in place. In the absence of this the business may not be able to function smoothly. A well laid down road and rail services helps in connecting the remotest corners with important business locations in other parts of the country. Only if a business finds the infrastructural facilities in a city to be proper they invest otherwise they may not take the initiative. In some cases bi g business houses form an alliance with the local government to develop the necessary infrastructure. But this may not be feasible for small private companies as they have limited resources. In this case the local