The term capital budgeting is used to describe how managers plan significant outlays on projects that have long-term implications such as the purchase of new equipment and the introduction of new products. Most companies have many more potential projects than can actually be funded. Hence, managers must carefully select those projects that promise the greatest future return. How well managers make these capital budgeting decisions is a critical factor in the long-run profitability of the company.
- Evaluate the acceptability of an investment project using the Net Present Value
- Evaluate the acceptability of an investment project using the Internal Rate of Return
- Evaluate an investment project that has uncertain cash flows.
- Rank investment projects in order of preference.
- Determine the payback period for an investment
- Compute the simple rate of return for an investment.
- Understand present value concepts and the use of present value.
- Investment project acceptability assessment using the Net Present Value method
- Investment project acceptability assessment using the Internal Rate of Return method
- Investment project assessment that has uncertain cash flows
- Rank investment projects in order of preference
- Defining investment projects in order for an investment
- Simple rate of return calculation for an investment
- present value concepts and the use of present value
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