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Bank of America: Decisions for the Future

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Bank of America: Decisions for the Future

ECO 550: Managerial Economics

16 June 2013

Abstract

Long-term capital budgeting is the process used by many companies to make substantial term investments, in order to receive the greatest cash flow. A company must first look at an analysis of cash flows and cost and earnings of the project to determine whether to accept or reject a capital budgeting project. The three rules used to make decisions towards capital budgeting; the payback period, net present value (NPV), and internal rate of return (IRR). The Payback Period is the tool that is used to determine how long it takes for the project to recover its initial costs for funding the project. The Net Present Value shows how the present project will affect the company. The Internal Rate of Return reveals the discount rate if the NPV equals zero. The antitrust law is a federal and state law regulation of corporations. The law insures that company does not grow too large which may prevent the growth of other corporations. The government believes that without this law that prices can become fixed and demand will be unfair in the market. In Assignment 3, I discussed the publicly traded company, Bank of America Corporation, and how the corporation deals with competition and change. In this paper, I will discuss the government regulations for mergers, the possible merger that could occur, and how the merger could be profitable.

Explain why government regulation is or is not needed, citing the major reasons for government involvement in a market economy. Provide support for your explanation. Governmental regulation is highly important in today’s economy. There are federal and state regulations that are set to ensure the common wealth and beneficial care of the people. If a company was also involved in global marketing, they would need to

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