Chapter 3: Capital Budgeting in a Nutshell
In This Chapter
Introducing the theory of capital budgeting
Putting it all together
Calculating the rate of return on capital
Measuring liquidity
Thinking about risk
Relating capital budgeting to QuickBooks
The challenge for any business is allocating capital, or money. Although you have limited amounts of capital, your ideas and opportunities are often unlimited.
Capital budgeting, in a nutshell, helps you to sift through all these ideas and opportunities. Capital budgeting lets you answer questions like the following: Should I replace that key piece of machinery that we use in the factory or get a new delivery truck? Should we buy the building our offices are in? Or should we purchase that competitor’s operation because it’s for sale?
Introducing the Theory of Capital Budgeting
Capital budgeting boils down to the idea that you should look ...
