© 2013 Cengage Learning. All Rights Reserved. May
Author : tawny-fly | Published Date : 2025-05-29
Description: 2013 Cengage Learning All Rights Reserved May not be scanned copied duplicated or posted to a publicly accessible website in whole or in part Chapter 15 Capital Budgeting 2013 Cengage Learning All Rights Reserved May not be
Presentation Embed Code
Download Presentation
Download
Presentation The PPT/PDF document
"© 2013 Cengage Learning. All Rights Reserved. May" is the property of its rightful owner.
Permission is granted to download and print the materials on this website for personal, non-commercial use only,
and to display it on your personal computer provided you do not modify the materials and that you retain all
copyright notices contained in the materials. By downloading content from our website, you accept the terms of
this agreement.
Transcript:© 2013 Cengage Learning. All Rights Reserved. May:
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 15: Capital Budgeting © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objectives Why do most capital budgeting methods focus on cash flows? How is payback period computed, and what does it measure? How are the net present value (NPV) and profitability index (PI) of a project computed, and what do they measure? How is the internal rate of return (IRR) on a project computed, and what does that rate measure? How do taxation and depreciation affect cash flows? What are the underlying assumptions and limitations of each capital project evaluation method? How do managers rank investment projects? How is risk considered in capital budgeting analyses? How and why should management conduct a post-investment audit of a capital project? (Appendix 1) How are present values (PV) calculated? (Appendix 2) What are the advantages and disadvantages of the accounting rate of return method? © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. Capital Assets Capital assets are long-term assets used to: Generate future revenues or cost savings Provide distribution, service, or production capacity Tangible fixed assets Land, building, machinery, etc. Intangible assets Capital lease, patent, etc. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. Capital Budgeting Capital budgeting involves evaluating and ranking alternative future investments to effectively and efficiently allocate limited capital. Plan and prepare the capital budget Review past investments to assess success of past decisions and enhance the decision process in the future Compare and evaluate alternative projects Financial and nonfinancial criteria Short- and long-term benefits Usually multiple criteria Consider all significant stakeholders © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. Capital Budgeting as Part of the Financial Budget Operating Budget Cash Budget Capital Budget Income Statement Statement of Retained Earnings Balance Sheet Statement of Cash Flows © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible
