ADMS 1500 Lecture Notes - Discounted Cash Flow, Capital Budgeting, Cash Flow

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As seen last class, there are several sources of capital, each one with its own level of risk and cost. Investing capital in short term assets was seen previously under working capital" management (inventory, accounts receivable, accounts payable, cash, etc). Investing capital in long term assets will be seen in this class when discussing capital budgeting techniques. Short-term decisions affect the organization for a short period, involve small amounts of money and can be reversed at little cost. Therefore a short-term decision that was unwise is a temporary and inexpensive problem. Long-term decisions affect the organization over a long period, involve a large amount of money and cannot be reversed, except at great cost. Therefore it is vitally important that long-term decisions be taken correctly. 1: the process should be standardized throughout the organization. 2: the proposal should be a good fit with the organization"s strategy.

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