tailieunhanh - Lecture Managerial accounting - Chapter 13: Capital budgeting decisions

The term capital budgeting is used to describe how managers plan significant cash outlays on projects that have long-term implications, such as the purchase of new equipment and the introduction of new products. This chapter describes several tools that can be used by managers to help make these types of investment decisions. | Capital Budgeting Decisions Chapter 13 McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 13: Capital Budgeting Decisions The term capital budgeting is used to describe how managers plan significant cash outlays on projects that have long-term implications, such as the purchase of new equipment and the introduction of new products. This chapter describes several tools that can be used by managers to help make these types of investment decisions. The Net Present Value Method The net present value is interpreted as follows: If the net present value is positive, then the project is acceptable. If the net present value is zero, then the project is acceptable. If the net present value is negative, then the project is not acceptable. Typical Cash Outflows Repairs and maintenance Incremental operating costs Initial investment Working capital Examples of typical cash outflows that are included in net present value calculations are as shown. .

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