Scribd Logo
Upload

Welcome to Scribd!

  • Capital Budgeting

    Uploaded by

    Ayesha F. Siddiqui
    11 views9 pages
    The document discusses various capital budgeting methods used to evaluate investment projects, including present value, future value, weighted average cost of capital, annuities, perpetuities, and net present value. It outlines the capital budgeting process and categories of capital expenditures. The document also covers criteria for accepting or rejecting projects such as payback period, net present value, internal rate of return, and issues that can arise with multiple rates of return or net present value profiles.

    Original Description:

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    The document discusses various capital budgeting methods used to evaluate investment projects, including present value, future value, weighted average cost of capital, annuities, perpetuities, and net present value. It outlines the capital budgeting process and categories of capital expenditures. The document also covers criteria for accepting or rejecting projects such as payback period, net present value, internal rate of return, and issues that can arise with multiple rates of return or net present value profiles.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    11 views9 pages

    Capital Budgeting

    Uploaded by

    Ayesha F. Siddiqui
    The document discusses various capital budgeting methods used to evaluate investment projects, including present value, future value, weighted average cost of capital, annuities, perpetuities, and net present value. It outlines the capital budgeting process and categories of capital expenditures. The document also covers criteria for accepting or rejecting projects such as payback period, net present value, internal rate of return, and issues that can arise with multiple rates of return or net present value profiles.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 9

    The Pakistan Academy of Engineering

    Capital Budgeting Methods


    By

    Iqbal Hashmi
    Time Value of Money
    Present Value & Future Value WACC

    Operational & Capital Budgeting

    Annuity

    FVAordinary =

    Perpetuity
    Compounding
    Amortization
    Categories of Capital Expenditure
    1. Replacement
    2. Replacement: cost reduction.
    3. Expansion of existing products or markets.
    4. Expansion into new products or markets.
    5. Safety and/or environmental projects.
    6. Other projects.
    7. Mergers.
    Cost Iceberg
    Capital Budgeting Process
    1. Proposal Generation
    2. Review and Analysis
    3. Decision Making
    4. Implementation
    5. Follow-Up
    Capital Budget Approaches
    • Independent and Mutually Exclusive Projects
    • Unlimited Funds VS Capital Rationing
    • Accept-Reject VS Ranking Approach
    Criteria for Deciding to Accept or Reject
    Projects
    • Regular Payback
    • Discounted Payback
    • Net Present Value (NPV)
    • Internal Rate of Return (IRR)
    • Modified Internal Rate of Return (MIRR)
    Multiple IRR
    NPV Profile

    You might also like