FIN4 CASE, SLP, Thread Discussion
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background.docx
Module 4 - Background
Capital Budgeting with Funding Sources
Required Reading
Many of you are eager to start off with the formulas for capital budgeting, so this link is a good place to review the main formulas:
McCracken, M.E. (2005) Capital budgeting, retrieved from: http://teachmefinance.com/capitalbudgeting.html
Here is an example of net present value using Microsoft Excel:
Microsoft Office Online, NPV, Retrieved from https://support.office.microsoft.com/en-US/article/NPV-function-5c52df05-07cb-48e0-a006-97225eb960bc?ui=en-US&rs=en-US&ad=US
Here is another example of net present value:
Anthes, G. (2003) ROI guide: Net present value, Retrieved from http://www.computerworld.com/article/2581461/it-management/roi-guide--net-present-value.html
Here are some examples of how to compute internal rate of return using Microsoft Excel:
Microsoft Office Online, (n.d.) IRR, retrieved from: https://support.office.microsoft.com/en-US/Article/IRR-function-64925eaa-9988-495b-b290-3ad0c163c1bc?ui=en-US&rs=en-US&ad=US
Advanced Excel Business Center, (2008), Internal rate of return, retrieved from http://www.advanced-excel.com/internal_rate_of_return.html
For an example of the profitability index, see:
Investopedia (n.d.). How do you use the profitability index rule when scoping out a project? Retrieved from http://www.investopedia.com/ask/answers/020615/how-do-you-use-profitability-index-rule-when-scoping-out-project.asp
To gain a deeper understanding of capital budgeting beyond just the formulas, carefully review the following links:
Summary of Capital Budgeting. (n.d.) Summary of Capital Budgeting, Retrieved from:
http://www.studyfinance.com/lessons/capbudget/index.mv
Lefley, F. (1997). Modified internal rate of return: Will it replace IRR?. Management Accounting, 75(1), 64-65. Retrieved from http://www.highbeam.com/doc/1G1-19035236.html
Please review the following PowerPoint presentations:
Capital Budgeting
Return on Investment
Payback
American Superconductor switch ; Westboro company plans to raise money through a stock offering, Andi Esposito. Telegram & Gazette. Worcester, Mass.: Aug 26, 2003. pg. E. Retrieved from Proquest.
Harvey, C. (2002). How do CFOs make capital structure and budgeting decisions, from: Journal of Applied Corporate Finance, 15(1), 8-23.
Aswath Damodaran. 1. The Debt-Equity Trade Off: Stern School of Business, from Capital Structure Decision.
Capital Budgeting (2015) Pearson Learning Solution, New York
Optional Reading
Gotthilf, D. L. (1997). Long-term borrowing techniques. Treasurer's and Controller's Desk Book, American Management Association.
Kuhlemeyer, G. (2010). Findamentals of Financial Management, Pearson Education (read Chapter 13: Capital Budgeting Techniques)l.
Capital Budgeting - Lecture 5 Listed in the Presentations.
