Capital Budgeting in 30 Minutes

Switching costs for capital investment are high and do-overs are expensive. A capital project is simply any use of the company’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 and shareholders 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 and shareholders with the knowledge to contribute to capital structure decisions that promote the financial health and sustainability of their companies.
  • Capital Budgeting in 30 Minutes
    • Capital Budgeting in 30 Minutes assists directors and shareholders evaluate proposed capital projects and contribute to capital budgeting decisions that enhance value.
  • Distribution Policy in 30 Minutes
    • Of the three primary corporate finance decisions, distribution policy is the most transparent to shareholders. This whitepaper helps directors formulate and communicate a distribution policy that contributes to shareholder wealth and satisfaction.