Appendix B.

Capital Budgeting Template Strictly Confidential

Table of Contents
#VALUE!

Notes
This Excel model is for educational purposes only and should not be used for any other reason.
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 CAPITAL BUDGETING WORKSHEET 5

© Corporate Finance Institute. All rights reserved. 

Capital Budgeting Template

Initial Investment Cash Flow Details Discount rate

Initial Investment $50,000 Revenues in year 1 $40,000 Approach(1:Direct; 2:WACC)
Opportunity cost $7,484 Var. Expenses as % of Rev 50% Discount Rate (Direct)
Lifetime of the investment (yrs) 8 Fixed expenses in year 1 $5,000 Beta
Salvage Value at end of project $10,000 Tax rate on net income 40% Risk Free Rate
Deprec. method(1:St.line;2:DDB) 1 Equity Risk Premium
Tax Credit (if any ) 10% Working Capital Debt Ratio
Other invest.(non-depreciable) 0 Initial Investment in Working Cap $10,000 Cost of Debt
Working Capital as % of Rev 25% WACC
Salvageable fraction at end 100%

Growth Rates
Year 0 1 2 3 4 5 6 7 8
Revenues na 10.00% 10.00% 10.00% 10.00% 5.00% 5.00% 3.00%
Fixed Expenses na 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Initial Investment
 CAPITAL BUDGETING WORKSHEET 6

Investment $50,000
- Tax Credit $5,000
Net Investment $45,000
+ Working Cap $10,000
+ Opp. Cost $7,484
+ Other invest. $0
Initial Investment $62,484

Salvate Value
Equipment $0 $0 $0 $0 $0 $0 $0 $10,000
Working Capital $0 $0 $0 $0 $0 $0 $0 $16,626

Operating Cash Flow

Lifetime Index 1 1 1 1 1 1 1 1
Revenues $40,000 $44,000 $48,400 $53,240 $58,564 $61,492 $64,567 $66,504
- Variable Expenses $20,000 $22,000 $24,200 $26,620 $29,282 $30,746 $32,283 $33,252
- Fixed Expenses $5,000 $5,500 $6,050 $6,655 $7,321 $8,053 $8,858 $9,744
EBITDA $15,000 $16,500 $18,150 $19,965 $21,962 $22,694 $23,426 $23,508
- Depreciation $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
EBIT $10,000 $11,500 $13,150 $14,965 $16,962 $17,694 $18,426 $18,508
-Tax $4,000 $4,600 $5,260 $5,986 $6,785 $7,077 $7,370 $7,403
EBIT(1-t) $6,000 $6,900 $7,890 $8,979 $10,177 $10,616 $11,055 $11,105
+ Depreciation $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
- ∂ Work. Cap $0 $1,000 $1,100 $1,210 $1,331 $732 $769 $484
Cash Flow (CF) ($62,484) $11,000 $10,900 $11,790 $12,769 $13,846 $14,884 $15,287 $15,621
Discount Factor 1 1.107 1.225 1.356 1.501 1.661 1.839 2.035 2.253
Discounted CF ($62,484) $9,938 $8,897 $8,695 $8,507 $8,334 $8,094 $7,511 $18,754

Depreciation Schedule BOOK VALUE & DEPRECIATION

Book Value (opening) $50,000 $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000
Depreciation $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
 CAPITAL BUDGETING WORKSHEET 7

Book Value (closing) $50,000 $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000

Investment Returns
NPV $16,247
IRR 12.49%
ROC 26.93%
 CAPITAL BUDGETING WORKSHEET 8

pproach(1:Direct; 2:WACC) 2
scount Rate (Direct) 10%
0.9
8.00%
quity Risk Premium 5.50%
30.00%
9.00%
10.69%

9 10
3.00% 2.00%
10.00% 10.00%
 CAPITAL BUDGETING WORKSHEET 9

$0 $0
$0 $0

0 0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
0.000 0.000
$0 $0

$0 $0
$0 $0
 CAPITAL BUDGETING WORKSHEET 10

$0 $0