congratulations on completing another
chapter of the finance manager course you’re doing well keep it up in this
section our focus will be on capital budgeting we will explain what capital
budgeting is and why companies use it when making strategic decisions then we
will continue by introducing two fundamental notions for those of you who
need a quick refresher the time value of money and discounting cash flows once we
have covered these topics we will be ready to introduce a few techniques that
allow us to answer the two most important questions in capital budgeting
does the investment make sense and is this the best alternative we have will
study the payback method with the NPV and IRR techniques then we’ll talk about
the typical discount rates companies use to measure a desired rate of return and
account for risk and the time value of money we’ll also learn about the cost of
equity cost of debt and the weighted average cost of return whack at the end
we’ll be able to wrap it up with a great example featuring a company that tries
to assess an investment opportunity and compares it with other alternatives
sounds great right okay let’s dive straight in and learn more about capital
budgeting