Chapter 11 - Capital Budgeting Process of planning,...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
Capital Budgeting Process of planning, evaluating and selecting the Fixed Asset investments the firm will undertake, consistent with shareholder wealth maximization
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
PLANNING A comprehensive “capital plan” is generated as part of the overall budgeting process. It includes strategic investments from executives as well as operational investments from the divisional level Projects are usually sorted by types: Expansion Replacement Requirements
Background image of page 2
Evalulating Forecast project’s cash flows (costs and benefits) expected over the asset’s useful or economic life (chapter 12) AND Compare the costs and benefits on a TVM basis (chapter 11) NPV - net present value IRR - internal rate of return MIRR - modified internal rate of return Payback Period (not TVM based)
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Selecting Involves picking the best projects, especially when funding is limited (capital rationing).
Background image of page 4
Net Present Value (NPV) Present value of the future cash flows, net of the initial investment. $ figure that represents how much the value of
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/24/2011 for the course MKT 291 taught by Professor Brandabur during the Spring '08 term at Miami University.

Page1 / 12

Chapter 11 - Capital Budgeting Process of planning,...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online