1. Capital Budgeting

2.  What is a Capital Asset?  Why do we budget for them separately?  Why do we use cash flow instead of net income?  How do we decide what Capital Projects are best?  What about if there isn’t enough money?  How do you convince the CFO to fund your projects?

3.  Payback Period ◦ No consideration of inflows after period ◦ Doesn’t consider the time value of money  Net Present Value ◦ Ignores what is done with the cash inflows ◦ Assumes cash flows even far in future.. Are valid  Internal Rate of Return ◦ Assumes cash flows even far in future.. Are valid ◦ No direct comparison of projects that pay off quickly

5.  Annual costs and inflows  Product life  Interest Rates  Economic conditions  Technological Change