Chapter 9

Property, Plant, and Equipment

When an organization invests a large sum in property, plant, and equipment, if a mistake occurs in selecting which projects to approve, the effects can be significant and transparent for many periods. The long lives of fixed assets, plus the multitude of techniques that a controller uses to evaluate whether to invest the funds in a specific project, can have profound and lingering effects on future profits and cash flows.

This chapter discusses the role of the small business controller in capital investment decisions and reviews several methods used in practice to evaluate capital investment projects, including the payback, net present value (NPV), and internal rate of return methods.

The Role of the ...

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