Learn how to make capital budgeting decisions from a certified public accountant (CPA)

What you will learn

Explain how to make capital budgeting decisions

Discuss the common scenarios related to capital budgeting decisions

Calculate the net present value (NPV) for a capital budgeting decision

Calculate the internal rate of return (IRR) for a capital budgeting decision

Calculate the payback period for a capital budgeting decision

Calculate the modified internal rate of return (MIRR)

Compare capital budgeting projects

Description

This course will show how to make capital budgeting decisions from a corporate finance perspective.

We will include many example problems, both in the format of presentations and Excel worksheet problems. The Excel worksheet presentations will include a downloadable Excel workbook with at least two tabs, one with the answer, the second with a preformatted worksheet that can be completed in a step-by-step process along with the instructional videos.

Capital budgeting decisions involve planning for projects and future cash flows extending more then one year into the future. The common example of a capital budgeting decision is the decision to purchase a large piece of equipment that will impact future cash flow for multiple years.

The typical format of a capital budgeting decision often includes a cash out flow a time period zero, resulting in cash inflows, or reduced outflows due to increase efficiencies, over multiple years.

Because capital budgeting decisions impact cash flows for multiple years, time value of money concepts are used, including present value of one calculations and present value of annuity calculations.

The primary tools used in capital budgeting decisions are the net present value calculation (NPV) and the internal rate of return calculation (IRR). Both of these tools utilize time value of money concepts, and we will spend a lot of time with them.

We will also discuss the payback period calculation and the modified internal rate of return or (MIRR).

English

Language

Content

Introduction

1205 Capital Budgeting Decision Overview

1210 Payback Period

1215 Net Present Value (NPV)

1220 Internal Rate of Return (IRR)

1225 Project Selection Process

1230 Modified Internal Rate of Return (MIRR)

1235 Fixed Asset Replacement Decision

Practice Probs. – Capital Budgeting

1211 Cash Flow Calculation

1213 Cash Flow Impact of Depreciation Due to Taxes

1214 Cash Flow Impact of Tax Rate Change

1216 Payback Period

1217 Payback Period Comparing Projects of Different Length

1219 Payback Period Time Value of Money Limitation

1220 Net Present Value (NPV) vs Payback Period

1221 Internal Rate of Return (IRR) Problem 1

1222 Internal Rate of Return (IRR) Problem 2

1223 Internal Rate of Return (IRR) Uneven Future Inflows

1224 Net Present Value (NPV) With Negative Future Outflow

1225 Net Present Value (NPV) With Closing Cost

1226 Net Present Value (NPV) Delayed Payments

1227 Net Present Value (NPV) vs Internal Rate of Return (IRR) Prob. 1

1228 Net Present Value (NPV) vs Internal Rate of Return (IRR) Prob. 2

1229 Profitability Index


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1230 Capital Budgeting with Reinvestment Rate Assumption

1231 Modified Internal Rate of Return (MIRR)

1234 Net Present Value Changing Discount Rate

1235 MACRS Depreciation, Cash Flow, & Net Present Value Prob. 1

1237 MACRS Depreciation, Cash Flow, & Net Present Value Prob. 2

1238 5 Year MACRS Depreciation, Cash Flow, & Net Present Value

1239 7 MACRS Depreciation, 10 Year Cash Flow, & Net Present Value

1240 Land & 5 MACRS Depreciation, Cash Flow, & Net Present Value

1241 Sales of Depreciated Assets & Tax Impact

Excel Probs. – Capital Budgeting

1211 Cash Flow Calculation

1213 Cash Flow Impact of Depreciation Due to Taxes

1214 Cash Flow Impact of Tax Rate Change

1216 Payback Period

1217 Payback Period Comparing Projects of Different Length

1219 Payback Period Time Value of Money Limitation

1220 Net Present Value (NPV) vs Payback Period

1221 Internal Rate of Return (IRR) Problem 1

1222 Internal Rate of Return (IRR) Problem 2

1223 Internal Rate of Return (IRR) Uneven Future Inflows

1224 Net Present Value (NPV) With Negative Future Outflow

1225 Net Present Value (NPV) With Closing Cost

1226 Net Present Value (NPV) Delayed Payments

1227 Net Present Value (NPV) vs Internal Rate of Return (IRR) Prob. 1

1228 Net Present Value (NPV) vs Internal Rate of Return (IRR) Prob. 2

1229 Profitability Index

1230 Capital Budgeting with Reinvestment Rate Assumption

1231 Modified Internal Rate of Return (MIRR)

1234 Net Present Value Changing Discount Rate

1235 MACRS Depreciation, Cash Flow, & Net Present Value Prob. 1

1237 MACRS Depreciation, Cash Flow, & Net Present Value Prob. 2

1238 6 Year MACRS Depreciation, Cash Flow, & Net Present Value

1239 7 MACRS Depreciation, 10 Year Cash Flow, & Net Present Value

1240 Land & 5 MACRS Depreciation, Cash Flow, & Net Present Value

1241 Sales of Depreciated Assets & Taxes Impact

1242 5 Year MACRS Depreciation, WACC, Cash Flow, & Net Present Value

1243 Buy New Fixed Asset or Keep Old Decision