Capital Budgeting
Financial Appraisal of Investment Projects

This book explains the financial appraisal of capital budgeting projects.

Don Dayananda (Author), Richard Irons (Author), Steve Harrison (Author), John Herbohn (Author), Patrick Rowland (Author)

9780521817820, Cambridge University Press

Hardback, published 17 October 2002

342 pages, 85 tables
24.4 x 17 x 2.1 cm, 0.8 kg

This book explains the financial appraisal of capital budgeting projects. The coverage extends from the development of basic concepts, principles and techniques to the application of them in increasingly complex and real-world situations. Identification and estimation (including forecasting) of cash flows, project appraisal formulae, and the application of net present value (NPV), internal rate of return (IRR) and other project evaluation criteria are illustrated with a variety of calculation examples. Risk analysis is extensively covered by the use of risk adjusted discount rate, certainty equivalent, sensitivity, simulation and Monte Carlo analysis. The NPV and IRR models are further applied to forestry, property and international investments. Resource constraints are introduced to the capital budgeting decisions with a variety of worked examples using linear programming technique. All calculations are extensively supported by Excel workbooks on the Web, and each chapter is well reviewed by end of chapter questions.

1. Capital budgeting: an overview
2. Project cash flows
3. Forecasting cash flows: overview, quantitative techniques, approaches
4. Forecasting cash flows: qualitative methods
5. Essential Formulae in project appraisal
6. Project analysis under certainty
7. Project appraisal under risk
8. Sensitivity and break-even analysis
9. Simulation concepts and methods
10. Case study in financial modelling and simulation of a forestry investment
11. Resource constraints and linear programming
12. More advanced linear programming concepts and methods
13. Financial modelling case study in forestry project evaluation
14. Property investment analysis
15. Forecasting and analysing risks in property investments
16. Multinational corporations and International Project appraisal
Appendix A. Answers to review questions.

Subject Areas: Educational: Mathematics & numeracy [YQM], Forestry & related industries [KNAL], Business mathematics & systems [KJQ], Business & management [KJ]