Capital Budgeting Decisions:
Learning Objectives:
Evaluate the acceptability of an investment project using the net present value method.
Evaluate the acceptability of an investment project using the internal rate of return method.
Capital Budget:
This is the estimated amount planned to be expended for capital items in a given fiscal period.
capital budgeting
Refers generally to analysis procedures for ranking
investments, given a limited amount of total capital that has to be allocated
among the various capital investment opportunities of a business.
Capital budget
A firm's set of planned capital expenditures.
Similar financial terms
Capital stock
The value of an outstanding share of stock at the time it was issued ...
capital budgeting
The formal planning for significant expenditures, such as property, plant and equipment.
» For more clarity on this term: ...
capital budgeting
process of making long-term planning decisions for capital investments. There are typically two types of investment decisions: (1) Selecting new facilities or expanding existing facilities.
Managing Capital Budgets for Small and Medium-Sized Companies
by Neil Seitz ...
CAPITAL BUDGETING - The decision-making process with respect to investment in fixed-assets. It involves...
CAPITAL BUILDER ACCOUNT (CBA) - A Merrill Lynch brokerage account that allows investors to access the l...
CAPITAL BUDGET - is the estimated amount planned to be expended for capital items in a given fiscal per...
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Capital Budgeting
Introduces the concept of capital budgeting and the alternative criteria that financial managers may use in the investment decision process.
capital budgeting criteria that compare the present value of cash inflows of a project discounted at the risk-adjusted cost of capital to the present value of investment outlays. ...
Capital budgeting
Capital investment decisions
The investment decision
The financing decision ...
Capital budget: a budget for the use of a company's money.
Capital controls: regulations placed by a government on the amount of capital residents may hold.
Capital budgeting:
The evaluation and selection of a company's planned capital expenditures.
Français: Budget en capital
Español: Presupuesto de capital, presupuesto de gastos de capital, presupuesto de inversiones ...
Capital budget
A firm's planned capital expenditures.
Capital budgeting
The process of choosing the firm's long-term assets.
Capital Budget
A one year plan for financing a program of long-term work projects that lead to the physical development of the City.
CAPITAL BUDGET - The portion of a budget, or a separate budget, devoted to proposed additions to capital assets and the means of financing those additions.
CAPITAL EXPENDITURE - Refer to CAPITAL OUTLAYS.
Capital Budgeting. A formal plan for making investments in plant, equipment, other fixed assets, advertising projects, etc. Items included in the capital budget have lives in excess of one year and often require long-range planning.
Capital budget - Plan of proposed acquisitions and replacements of long-term assets and their financing.
Capital Budget: The cost of planned investment projects.
Capital Expenditures (CapEx): Long-term expenditures for property, plant, and equipment.
Four Capital Budgeting Methods
The capital budgeting methods covered in Chapter 27 are:
Annual Rate of Return (also called the Accounting Rate of Return) Method
Cash Payback Method
Net Present Value Method (NPV) ...
capital budgeting or master budgeting
In evaluating a capital expenditure proposal, management should identify and evaluate the amount of an investment, the periodic returns from an investment, and which rate of return?
Capital Budgeting
Cost of Capital
Council of Economic Advisers
Individual Development Account - IDA
Internal Rate of Return - IRR ...
Capital budgeting is the set of procedures and economic evaluation techniques used to analyze long-term capital investments.
Capital cost (CC) ...
Capital budgeting
The process of choosing the firm's long-term assets.
Capital Builder Account (CBA)
A Merrill Lynch brokerage account that allows investors to access the loan value of his or her eligible securities to buy or sell securities.
Capital Budgeting
The process in which a business determines whether projects such as building a new plant or investing in a long-term venture are worth pursuing.
Capital budget consists of two sections: capital expenses of the projects and influxing the needed sources for its realization.
A capital budget that under no circumstances can be violated.
Hard currency
A freely convertible currency that is not expected to depreciate in value in the foreseeable future.
In capital budgeting, the concept that investment projects are financed out of a pool of bonds, preferred stock, and common stock, and a weighted-average cost of capital must be used to calculate investment returns.
Pooling of interests ...
During capital budgeting, companies compare the rates of return of different projects to select which projects to pursue in order to generate maximum return or wealth for the company's stockholders.
Business plan
Capital budgeting
Capital investment decisions
The investment decision ...
Acceptance of a capital budgeting project contingent on the acceptance of another project.
Detrend
To remove the general drift, tendency or bent of a set of statistical data as related to time.
Dependent Acceptance of a capital budgeting project contingent on the acceptance of another project.
Hard capital rationing A capital budget that under no circumstances can be violated. Hard currency A freely convertible currency that is not expected to depreciate in value in the foreseeable future.
Post-audit A set of procedures for evaluating a capital budgeting decision after the fact. Postponement option The option of postponing a project without eliminating the possibility of undertaking it.
For capital budgeting finance, mean return has a similar formula. Mean return in capital budgeting is calculated by the maximum risk-tolerance weighted return instead of the probability.
Definition: [crh] In capital budgeting, the concept that investment projects are financed out of a Definition: l"pool of bonds, preferred stock, and common stock, ...
Profitability Index (PI) A DISCOUNTED cash flow method used in capital budgeting to evaluate the financial viability of investment proposals.
The required return in capital budgeting. For example, if a project has an expected rate of return higher than the hurdle rate, the project may be accepted.
Hypothetical Tax ...
Dependent definition :
Acceptance of a capital budgeting project contingent on the acceptance of another project.
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NPV is used in capital budgeting to analyze the profitability of an investment or project.
NPV analysis is sensitive to the reliability of future cash inflows that an investment or project will yield.
Formula: ...
A detailed schedule of financial activity, such as an advertising budget, a sales budget, or a capital budget.
Definition 2.
An estimation of an organization's revenue and expenses over a specified period of time.
The valuation of risk assets and the selection of risky investments in stock portfolios and capital budgets, Review of Economics and Statistics, 47: 13-37.
Malkiel, Burton (1973). A Random Walk Down Wall Street, New York: Norton.
Cost of Capital. The discount rate that should be used in the capital budgeting process.
To place limits on the amount of new investment undertaken by a firm, either by using a higher cost of capital, or by setting a maximum on the entire capital budget or parts of it.
Capital Requirements ...
Budget
A detailed schedule of financial activity, such as an advertising budget, a sales budget, or a capital budget.
average life expectancies-fifty-nine years versus eighty years (U.S. Census Bureau 2000.) Another insidious way in which corruption kills is that it skews public spending away from operating budgets such as health care and toward capital ...
Hurdle rate The required return in capital budgeting. Hybrid A package containing two or more different kinds of risk management instruments that are usually interactive.
 See also: Capital budgeting, Expense, Net present value, Cost of capital, Banks
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