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Capital Budgeting

Capital Budgeting. Capital budgeting describes the long-termplanning for making and financingmajor long-term projects.. 1. Identify potential investments.. 2. Choose an investment.. 3. Follow-up or ?postaudit.". Payback Model. Payback time, or payback period, is thetime it will take to recoup, in

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Capital Budgeting

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    1. Capital Budgeting Chapter 11

    2. Capital Budgeting Investments, purchase of machinery/buildingsInvestments, purchase of machinery/buildings

    3. Payback Model

    4. Payback Model Example

    5. Accounting Rate-of-Return Model

    6. Accounting Rate-of-Return Example

    7. Accounting Rate-of-Return Example

    8. Discounted-Cash-Flow Models (DCF) To explain what is time value of money.To explain what is time value of money.

    9. Net Present Value Model

    10. Net Present Value Model

    11. Applying the NPV Method

    12. NPV Example

    13. NPV Example For discounting factor table – page 821 (Appendix B)For discounting factor table – page 821 (Appendix B)

    14. NPV Example For annuity table ? page 824, Appendix B, Table 2.For annuity table ? page 824, Appendix B, Table 2.

    15. Assumptions of the NPV Model

    16. Decision Rules

    17. Internal Rate of Return Model No need to know detailsNo need to know details

    18. Sensitivity Analysis

    19. Sensitivity Analysis Example

    20. Sensitivity Analysis Example

    21. Relevant Cash Flows for NPV

    22. Operating Cash Flows

    23. Cash Flows for Investment in Technology

    24. Cash Flows for Investment in Technology

    25. Income Taxes and Capital Budgeting Savings = income ? tax on income.Savings = income ? tax on income.

    26. Marginal Income Tax Rate

    27. Effects of Depreciation Deductions

    28. Tax Deductions, Capital Effects, and Timing

    29. Tax Deductions, Capital Effects, and Timing

    30. Gains or Losses on Disposal

    31. Gains or Losses on Disposal

    32. Gains or Losses on Disposal

    33. Post Audit

    34. Exercise 11-45 (Page 506)

    35. Exercise 11-45 (Page 506)

    36. Exercise 11-45 (Page 506)

    37. Exercise 11-45 (Page 506)

    38. Exercise 11-45 (Page 506)

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