SCJNY BUS 219 - Capital Budgeting (50 pages)

Previewing pages 1, 2, 3, 24, 25, 26, 27, 48, 49, 50 of 50 page document View the full content.
View Full Document

Capital Budgeting



Previewing pages 1, 2, 3, 24, 25, 26, 27, 48, 49, 50 of actual document.

View the full content.
View Full Document
View Full Document

Capital Budgeting

57 views

Other


Pages:
50
School:
St. Joseph's College New York
Course:
Bus 219 - Principles of Finance

Unformatted text preview:

Capital Budgeting Economic concepts and finance decision making tools BUS 219 Building Blocks of Knowledge Time value of money a dollar in the future is worth less than a dollar in hand now Net present value 1 NPV PV of cash flow benefits Investment cost 2 Accept project if NPV 0 Financial Statements Cash is king What is this slide show about Ingtegrates topics from several chapters of Corporate Finance NPV Discounted cashflow analysis Project analysis Capital Budgeting Investment decisions involving capital assets tangible property including durable goods equipment buildings installations land Capital refers to the fixed assets of an organization factories hospitals schools and their major equipment fit into this category Capital Budgeting more A budget is a plan which explains the projected cash flows during some future period A capital budget is therefore an outline of planed expenditures on fixed assets and capital budgeting is the whole process of analyzing projects and deciding whether they should be included in the capital budget Capital Budgeting Public Sector Capital budgeting is done in the public sector too although it is not always referred to as such Economic analysis and investment analysis are synonymous terms that one my hear Benefit cost analysis and cost effectiveness analysis play an important role in the process of capital budgeting Capital budgeting decisions are among the most important ones made by managers and executives Importance Results of investments in schools and hospitals continue for many years Once these decisions are made the organization loses some of its flexibility Once a major piece of equipment is purchased the organization is locked in to using it for the long term Importance more Errors in the forecast need for big ticket assets can have serious consequences LILCO Shoreham Imagine an office or hospital being built or a school established and then there is not enough demand to utilize the services Conversely what happens if



View Full Document

Access the best Study Guides, Lecture Notes and Practice Exams

Loading Unlocking...
Login

Join to view Capital Budgeting and access 3M+ class-specific study document.

or
We will never post anything without your permission.
Don't have an account?
Sign Up

Join to view Capital Budgeting and access 3M+ class-specific study document.

or

By creating an account you agree to our Privacy Policy and Terms Of Use

Already a member?