Main Forum>Capital budgeting PPT MBA

Unregistered 04:09 PM 12th March 2016

Hello sir I am making power point presentation on Capital budgeting so please provide me some points to make it easy.

Shaleen 04:11 PM 12th March 2016

Capital budgeting, or investment appraisal, is the planning process used to determine whether an organization's long term investments such as new machinery, replacement machinery, new plants.

Points of making PPT on Capital budgeting

Capital Budgeting

1. Investment decision making process, which involves fixed assets.

Capital

Capital budget

2. Long-term decisions

Sizable cash outlays

Difficult to reverse

3. Important to firmâ€™s future

Profitability

Growth and Survival

Future direction

**The Five Stages of Capital Budgeting**

Stage 1: Investment screening and selection

Stage 2: Capital budgeting proposal

Stage 3: Budget approval and authorization

Stage 4: Project tracking

Stage 5: Post completion audit

**Steps**

Estimate the CFs (inflows & outflows).

Assess the riskiness of the CFs.

Determine the appropriate discount rate, k = WACC for project.

Find NPV and/or IRR

Accept if NPV > 0 and/or IRR > WACC.

**Investment Evaluation Techniques**

Payback Period (PB)

Discounted Payback

Profitability Index (PI)

Internal Rate of Return (IRR)

Modified Internal Rate of Return (MIRR)

Points of making PPT on Capital budgeting

Capital Budgeting

1. Investment decision making process, which involves fixed assets.

Capital

Capital budget

2. Long-term decisions

Sizable cash outlays

Difficult to reverse

3. Important to firmâ€™s future

Profitability

Growth and Survival

Future direction

Stage 1: Investment screening and selection

Stage 2: Capital budgeting proposal

Stage 3: Budget approval and authorization

Stage 4: Project tracking

Stage 5: Post completion audit

Estimate the CFs (inflows & outflows).

Assess the riskiness of the CFs.

Determine the appropriate discount rate, k = WACC for project.

Find NPV and/or IRR

Accept if NPV > 0 and/or IRR > WACC.

Payback Period (PB)

Discounted Payback

Profitability Index (PI)

Internal Rate of Return (IRR)

Modified Internal Rate of Return (MIRR)

Attached: PPT on Capital budgeting.zip (44.1 KB)