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ACTIVITY VIDEOS, Capital Budgeting Processes and Techniques, Cost of…
ACTIVITY VIDEOS
Cash Flows and Capital Budgeting
KEY CONCEPTS
Incremental Cash Flows
Impact of taxes and depreciation
Changes in working capital
TYPES OF CASH FLOWS
Initial Cash Flow
Operating Cash Flow
Terminal Cash Flow
Capital Budgeting Processes and Techniques
Evaluation techniques
STEPS IN THE PROCESS
Evaluation and selection
Identifying opportunities
Implementation
Monitoring and review
Recognixing potential projects that could benefit the company by analyzing the feasibility of each project using various valuation techniques
Capital budgeting involves the planning of long-term investments in projects expected to generate future cash flows. This may include acquiring new equipment, constructing new facilities, or developing new products.
Cost of Capital and Project Risk
Project Risk
Measuring Risk
Risk adjustment techniques
Cost of Capital
Cost of debt
Cost of equity
WACC. The average of the cost of debt and equity according to the company´s financing structure
The minimum rate the company needs to earn to justify an investment. The search to cover a unit of debt where the profit is that extra 1.1
Profitability Index PI
Payback Period PB
Internal Rate of Return IRR
Net Present Value NPV