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Capital Budgeting

In: A Practical Guide to Corporate Finance

Author

Listed:
  • Christophe Thibierge

    (ESCP Europe)

  • Andrew Beresford

    (ESCP Europe)

Abstract

Thinking about whether to go to college, deciding whether to buy a company or choosing between two machine tools: these are all investment decisions. You try to make the best decision: the one that is most profitable for the company or for yourself. When choosing investments, we rely on decision-making criteria (not too difficult) and on a forecast of future cash flows (a little more complicated …). In Chapter 1 we saw how to analyse a company’s financial statements and we ended with cash flows—the lifeblood of the company. We will now use this knowledge to make cash flow forecasts. In Chapter 2 we suffered through a few financial calculations, including discounting. We will make use of this knowledge in our decision-making criteria.

Suggested Citation

  • Christophe Thibierge & Andrew Beresford, 2015. "Capital Budgeting," Palgrave Macmillan Books, in: A Practical Guide to Corporate Finance, chapter 3, pages 74-102, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-137-49254-8_4
    DOI: 10.1057/9781137492548_4
    as

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