Capital Budgeting I

Capital Budgeting looks at what assets we want on the firm's balance sheet (or our own balance sheet!) So in essence we are looking for projects (in other words assets) that make us better off. My favorite method to use (by far) is NPV. But there are many other methods such as Payback, IRR, accounting rates of returns. All of these (and others) are used and you SHOULD know them, but if you only have time for one, MAKE IT NPV! I will make a second toolset for more advanced capital budgeting topics (real options, effective annual cost method, as well as behavioral biases that affect capital budgeting.

  1. A brief introduction to Capital Budgeting

    Here is a class presentation I did a few years ago to introduce capital budgeting. Not much has changed since then, so I will use it :) ...

  2. Understanding Net Present Value

    a well done 2 min video on the intuition behind NPV caluculations

  3. NPV and IRR in Excel 2010

    Let's be honest, you will use spreadsheets to do capital budgeting almost all the time. So let's start with it. This is a good present...

  4. NPV and IRR calculations using the TI BAII Plus calculator

    I will NOT get involved with calculator descriptions in class, but here is a video that will help you if you are using a financial calcul...

  5. Notes on NPV VS IRR

    Most of the time the NPV rule (accept if positive) and the IRR rule (accept if greater than the cost of capital) will give you the same d...

  6. Capital Budgeting Spreadsheet

    Here is a google spreadsheet I put together to show NPV, IRR, MIRR, Payback, Discounted Payback, Profitability Index, and average account...

Continue learning by following more paths or create your own. Join for FREE

By clicking 'Get Started Free' you agree to our Terms of Service and Privacy Policy