BUS 254 Lecture Notes - Lecture 13: Capital Budgeting, Cash Flow, Net Present Value
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BUS 254 Full Course Notes
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The process of making capital expenditure decisions is referred to as capital budgeting. Capital budgeting involves choosing among various capital projects to find the one(s) that will maximize a company"s return on its financial investment. The purpose of this chapter is to discuss the various techniques used to make effective capital budgeting decisions. The content and organization of the chapter are as follows: While accrual accounting has advantages over cash accounting in many. 2. contexts, for purposes of capital budgeting, estimated cash inflows and outflows are preferred for inputs into the capital budgeting decision tools. 3. can be made to accrual accounting numbers to estimate cash flows. Sometimes cash flow information is not available, in which case adjustments. The capital budgeting decision, under any technique, depends in part on a: the availability of funds, relationships among proposed projects, the company"s basic decision-making approach; and, the risk associated with a particular project.