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Effective Capital Budgeting Strategies in Corporate Finance

This presentation by University of the Witwatersrand students covers the theory and methods of capital budgeting, including identification and development processes, capital budgeting methods, selection processes, capital rationing, risk assessment, cost of capital, and control processes. Explore empirical evidence and practical applications of key concepts. Learn about accounting rate of return, profitability index, payback period, discounted payback period, equivalent annuity, internal rate of return, modified internal rate of return, net present value, risk analysis, and more.

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Effective Capital Budgeting Strategies in Corporate Finance

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  1. Capital BudgetingUniversity of the WitwatersrandTheory of Corporate FinanceMay 2011Amy Bellinger (314193)Natasha Glassford (0711574H)Terri Haarburger (0703464H)ThatoMesheza (0614661G)Stacey Proudfoot (317053)

  2. Presentation Outline • Introduction • Identification Process • Development Process • Capital Budgeting Methods • Selection Process • Capital Rationing • Risk Assessment • Cost of Capital • Control Process • Conclusion

  3. What is Capital Budgeting?

  4. Identification Process

  5. Development Process- Screening Process

  6. Development Process-Budgeting for Capital Projects

  7. Development Process- Cash Flow Estimation

  8. Capital Budgeting Methods- Accounting Rate of Return

  9. Accounting Rate of Return-Empirical Evidence

  10. Capital Budgeting Methods- Profitability Index

  11. Profitability Index- Empirical Evidence

  12. Capital Budgeting Methods- Payback Period

  13. Payback Period- Empirical Evidence

  14. Capital Budgeting Methods- Discounted Payback Period

  15. Discounted Payback Period- Empirical Evidence

  16. Capital Budgeting Methods- Equivalent Annuity

  17. Capital Budgeting Methods- Internal Rate of Return

  18. Internal Rate of Return- Empirical Evidence

  19. Capital Budgeting Methods- Modified Internal Rate of Return

  20. Modified Internal Rate of Return-Empirical Evidence

  21. Capital Budgeting Methods- Net Present Value (NPV)

  22. NPV- Empirical Evidence

  23. Selection Process- Risk Analysis

  24. Risk Analysis- Empirical Evidence

  25. Selection Process- Capital Rationing

  26. Capital Rationing- Empirical Evidence Use headings from text??

  27. Cost of Capital

  28. Cost Of Capital- Empirical Evidence

  29. Control Process- Post Audit

  30. Control Process- Performance Measures

  31. Control Process- Performance Incentives

  32. Conclusion

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