Chapter 10
Calling in the Cavalry
IN THIS CHAPTER
Getting the gist of capital budgeting
Calculating rate of return and net present value
Figuring out how long it will take to recoup your investment
Making capital allocations work in your favor
Incorporating capital allocation into project management
When you think of investments, you probably think of things like stocks and bonds. These are types of investments, sure, but they’re only one class of investment, called financial investments. These investments are made in financial products and, for most businesses, they aren’t even the primary type of investment. That honor goes to a different type of investment, called a capital investment.
Considering how important capital investment is to every corporation, it comes as quite a relief that capital budgeting is an easy thing to perform. Throughout this chapter I show you how capital budgeting happens, including calculating the rates of returns on capital, determining the value of cash ...
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