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Tools For a Captital Budget Analysis

This is an introduction to Capital Budgeting. It introduces five types of capital budgeting techniques used to evaluate proposed investments. You'll find definitions for Net Present Value(NPV), Internal Rate of Return(IRR), Profitability Index(PI), Payback Period, and Accounting Rate of Return(ARR). This solution will also define classifications that firms use to classify their projects. These include cost reduction decisions, plant expansion decisions, equipment replacements decisions, expansion into new products or markets, and safety and/or environmental projects. This solutions will provide you with practical tools for analysis and classifications of capital budgets.

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Capital Budgeting Defined

? Capital budgeting is the process of evaluating proposed large, long-term investment projects.

? Capital budgeting involves decision making with respect to investment in fixed assets.

? Searching for new and more profitable investment opportunities.

? Economic analysis to determine profitability of each alternative proposed

? Predicting consequences of accepting ...

Solution Summary

This is an introduction to Capital Budgeting. It introduces five types of capital budgeting techniques used to evaluate proposed investments. You'll find definitions for Net Present Value(NPV), Internal Rate of Return(IRR), Profitability Index(PI), Payback Period, and Accounting Rate of Return(ARR). This solution will also define classifications that firms use to classify their projects. These include cost reduction decisions, plant expansion decisions, equipment replacements decisions, expansion into new products or markets, and safety and/or environmental projects. This solutions will provide you with practical tools for analysis and classifications of capital budgets.

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