1st slide

Financing decision- judgment regarding the method of raising capital to fund an investment
Investment decision- judgment about which assets to acquire to achieve the company’s stated
objectives

2nd slide
Broad Categories of Capital Budgeting Decisions:

1. Screening Decisions are those relating to whether a proposed project meets some present standard
of
acceptance.

2. Preference Decisions are those that relate to selecting from among several competing courses of
action.

3rd slide
CATEGORIES OF CAPITAL INVESTMENTS

* INDEPENDENT PROJECTS- projects whose cash flows are not affected by the acceptance or
non- acceptance of other projects.
-evaluated individually and reviewed against predetermined corporate
standards of acceptability.

* MUTUALLY EXCLUSIVE PROJECTS- a set of projects where only one can be accepted
-require the company to choose among competing alternatives
that provide the same basic service.

4th slide
*MUTUALLY INCLUSIVE PROJECTS
If a primary project is chosen, all related projects are also selected. Alternatively, rejection of the
primary project will dictate rejection of the others.

5th slide

OTHER TYPES OF CAPITAL INVESTMENTS:

 Investments mandated by law or policy

 Investments made to further strategic goals

 Investments to increase capacity or reduce costs

 Investments made for non-financial reasons