Switching costs for capital investment are high and do-overs are expensive. A capital project is simply any use of the family business’s capital resources in the present with a view toward earning a return on that investment over time, and may take the form of acquisitions, capital expenditures, research & development, or other investments. Net present value and internal rate of return are the two primary tools used to determine whether the forecasted marginal cash flows are sufficient to justify the proposed project. However, a healthy capital budgeting process goes beyond mere financial feasibility to address the proposed project’s “fit” within the overall corporate strategy. The purpose of this whitepaper is to assist directors in evaluating proposed capital projects and contributing to capital budgeting decisions that enhance value.
This whitepaper is the third in the “Corporate Finance in 30 Minutes Series.” Learn more about the whitepaper series below.
- Corporate Finance in 30 Minutes
- In this whitepaper, we distill the fundamental principles of corporate finance into an accessible and non-technical primer.
- Capital Structure in 30 Minutes
- Through this whitepaper, we equip directors to contribute to capital structure decisions that promote the financial health and sustainability of the family business.
- Capital Budgeting in 30 Minutes
- Capital Budgeting in 30 Minutes assists directors in evaluating proposed capital projects and contributing to capital budgeting decisions that enhance value.
- Capital Budgeting in 30 Minutes assists directors in evaluating proposed capital projects and contributing to capital budgeting decisions that enhance value.
- Dividend Policy in 30 Minutes
- From the perspective of family shareholders, dividend policy is the most transparent element of corporate finance. This whitepaper helps family business directors formulate and communicate a dividend policy that contributes to family shareholder wealth and satisfaction.
