- Describe how net present value is used in the financial decision making process.
- Explain the disadvantages of using the payback method.
- Compare and contrast the internal rate of return (IRR) method from the net present value method (NPV).
- Explain the effects of sunk costs and opportunity costs in deciding whether to accept a project.
- Review the financial considerations a company should make before investing in a project.
- Understand how net working capital, depreciation and interest influence the decision to buy or not to buy.
- Explain how inflation and interest rates affect the capital budgeting process.
- Review the types of assumptions used in sensitivity and scenario analysis.
- Describe how the options to expand or abandon a project are integrated in the capital budgeting process.
- Explain how decision trees are used to value investment alternatives.
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