CapitalBudgeting_201.. - CITT

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The Concept of the Cost of Capital • In capital budgeting there are two major aspects to be considered: – The investment decision, and – The financing decision. ©2012, Varmelous Ind. Inc. -- Slide 2
The Concept of the Cost of Capital • The investment decision is the decision to acquire an asset, a project, or product line, i.e., to buy, to lease, or not to lease. – It is partly derived from the management decision that requires a minimum rate of return expectation from such an investment. This rate is called by various names: hurdle rate, cost of capital, cut-off-rate, discount rate, or required rate of return (RRR). ©2012, Varmelous Ind. Inc. -- Slide 3
Page 1: Capital Budgeting Learning Outcomes
Page 5 and 6: The Concept of the Cost of Capital
Page 7 and 8: The Concept of the Cost of Capital
Page 9 and 10: Difficulty and importance in findin
Page 11 and 12: Capital Budgeting • When evaluati
Page 13 and 14: Capital Budgeting • Cash Flows: -
Page 15 and 16: Capital Budgeting • Discounted Ca
Page 17 and 18: Discounted Cash Flow - Net Present
Page 39 and 40: Discounted Cash Flow - (IRR) IRR DC
Page 41: About the presenter • Michel has

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