The decision to invest is a continual challenge, requiring insights into a firm's strategic direction, bottlenecks, cash flows, and expected risks. TheCapital Budgetingcourse provides clarity by describing the process flow for capital requests. It also covers the primary methods for determining whether a proposed investment is acceptable, as well as a number of strategic and risk-based considerations. Lease or buy financing options are also discussed, along with a system of capital budgeting controls. In short, the course provides the knowledge to assemble and operate a reliable capital budgeting system.
Learning Objectives
Upon successful completion of this course, participants will be able to:
Recognize the alterations available for improving an investment proposal, why sunk costs are excluded from proposals, and the alternatives for capital rationing.
Identify the market conditions in which different types of investments and investment decisions will be made.
Identify the basis for discounted cash flow analysis, and how net present value can be used.
Identify the elements of the cost of capital, and note how the cost of capital is calculated.
Recognize the derivation of throughput, the best ways to improve financial results, and situations in which local optimization is occurring.
Recognize the uses to which payback, real option, and complex environment analysis can be used to review investment proposals.
Specify the concepts involved in the lease or buy decision process, and the information to include in or exclude from the decision.
Identify the issues to be verified as part of the analysis of a capital budgeting request form.
Major Topics
Overview of Capital Budgeting
The Capital Budgeting Application Form
Capital Budgeting Strategy
Risk Levels
Discounted Cash Flow Analysis
Cash Flows
The Tax Rate
The Cost of Capital
Cost of Capital Derivation
Constraint Analysis
Other Capital Budgeting Analyses
The Lease or Buy Decision
Capital Budgeting Controls
