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Budgeting and Financial Management: Evaluating Capital Investments

Audience

Managers, prospective managers, and any other employees seeking advanced competency in the area of budgeting and financial planning

Prerequisites

An understanding of the principles of financial planning

Course Aim

To explain the theory of capital budgeting and appraisal techniques

Learning Objectives

Outline the reasons for capital budgeting. Explain the opportunity cost of investments. Define time value of money. Explain the authorization process for capital investment proposals. Explain how to carry out post investment audits. Use the NPV and IRR methods to appraise capital investment. Compare the IRR and NPV methods. Use the Payback Method and Accounting Rate of Return (ARR) to appraise capital investments. Appraise mutually exclusive projects.

Topics Covered

Theory of capital budgeting - Purpose of capital budgeting - Opportunity cost and time value of money - Capital investment process - Authorization of capital investments - Investment post audit Techniques for investment appraisal - Discounted cash flows and Net Present Value - Hands-on: Net Present Value - Internal rate of return - Hands-on: Internal Rate of Return Appraising capital investments - Mutually exclusive projects - Additional appraisal techniques - Hands-on: Mutually exclusive projects