The process of identifying analyzing and selecting

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Unformatted text preview: What is Capital Budgeting? The process of identifying, analyzing, and selecting investment projects whose returns (cash flows) are expected to extend beyond one year. 4 Certified Financial Controller CFC 2 The Capital Budgeting Process Generate investment proposals • Generate investment proposals consistent with the firm’s strategic objectives. • Estimate after-tax incremental operating cash flows for the investment projects. • Evaluate project incremental cash flows. 5 Certified Financial Controller CFC The Capital Budgeting Process • Select projects based on a valuemaximizing acceptance criterion. • Reevaluate implemented investment projects continually and perform postaudits for completed projects. 6 Certified Financial Controller CFC 3 Classification of Investment Project Proposals 1. New products or expansion of New products or expansion of existing products 2. Replacement of existing equipment or buildings 3. Research and development Research and development 4. Exploration 5. Other (e.g., safety or pollution related) 7 Certified Financial Controller CFC Screenin...
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This note was uploaded on 05/28/2013 for the course FINANCE economy taught by Professor Nill during the Fall '12 term at Bronx School Of Law And Finance.

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