Beruflich Dokumente
Kultur Dokumente
1
Introduction
• Chapter 1 introduces the concept of capital
budgeting, and sets out the structure of the
book.
• The important points are:
Capital budgeting is the most significant
financial activity of the firm.
Capital budgeting determines the core
activities of the firm over a long term future.
Capital budgeting decisions must be made
carefully and rationally. 2
Capital Budgeting Within The Firm
T h e P o s i t i o n o f C a
F i n a n c i a l G o a l o
W e a l t h M a x i m i s
I n v e s t m e nF t i n D a e n c c i is Dn o gi vn iD d e cn
C a p i t a l B u d g e t i n g
3
Examples of ‘Long Term Assets’
4
Aspects of Capital Budgeting
Capital Budgeting involves:
8
Aspects of Capital Budgeting
Risk Analysis – RADR and CE: Ch 7
Application of Sensitivity and Break
Even analyses to analyze risk:Ch 8.
Application of Simulation and Monte
Carlo Analysis as extra risk analysis:Ch 9.
Application of long term forecasting
and risk analysis to projects with very
long lives:Ch 10. 9
Aspects of Capital Budgeting
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