Fundamentals of Financial Management, Third Edition

6

Capital Budgeting in Practice

OBJECTIVES

To discuss capital budgeting in a case when capital is rationed

To discuss capital budgeting in inflationary conditions

To use capital budgeting techniques when projects have unequal lives

To include the conditions of risk in the project evaluation criteria

To throw light on various aspects of managerial options and computation of cash flows in such scenarios

To discuss capital budgeting process of multinational corporations.

The preceding chapter deals with the principles and techniques of capital budgeting. However, the problems concerning capital budgeting are not as simple and straightforward in real life. Practical realities introduce complexities that make the capital budgeting decision more ...