Lesson 5 Capital budgeting 英文管理会计课件 Management Accounting.ppt

MA2 Chen Yuanhong capital budgeting Lesson 5 Topics outline Capital budgeting stages Time value of money Discounted cash flows: Net present value Discounted cash flows: Internal rate of return Sensitivity analysis and relevant cash flows Payback period and accrual accounting rate of return Complexities in capital budgeting applications Capital budget and master budget Topic 1: Capital budgeting stages LEARNING OBJECTIVES Describe the six stages in capital budgeting decision making. Required reading Chapter 21, pages 591-594, up to “Discounted Cash Flow” Capital Budgeting Capital Budgeting is making a long-run planning decisions for investing in projects Capital Budgeting is a decision-making and control tool that spans multiple years Six Stages in Capital Budgeting Identification Stage determine which types of capital investments are necessary to accomplish organizational objectives and strategies Search Stage Explore alternative capital investments that will achieve organization objectives Information-Acquisition Stage consider the expected costs and benefits of alternative capital investments Six Stages in Capital Budgeting Selection Stage choose projects for implementation Financing Stage obtain project financing Implementation and Control Stage get projects under way and monitor their performance post audit Capital Budgeting Methods Some of the techniques consider the time value of money Discounted cash-flow methods (DCF) NPV IRR Some approaches do not consider the time value of money. They tend to be simpler than the discounted cash-flow methods and have a longer history of use. Payback method Accrual Accounting Rate of Return (AARR) Topic 2: Time value of money LEARNING OBJECTIVE Demonstrate a knowledge of the time value of money concepts. Required reading Chapter 21, pages 594-595, “Discounted Cash Flow?” Appendix B, pages 682-688, “Appendix B: Notes on Compound Interest and Interest Tables” Topic 3: Discounted cash flows: Netpresent valu