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Capital expenditure proposals

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Financial Management - Basic Principles Capital Expenditure Proposals.

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Capital expenditure proposals

  1. 1. BASIC PRINCIPLES OF CAPITAL EXPENDITURE PROPOSALS ASNAD P A II SEM MBA
  2. 2. CAPITAL EXPENDITURE PROPOSALS • Capital Expenditure Proposal is a formal request to undertake capital expenditures. • Capital Expenditure is the money spent to acquire or upgrade physical assets such as buildings and machinery.
  3. 3. CAPITAL EXPENDITURE PROPOSALS The proposed projects will be ranked according to a criteria. • Methods used for ranking are:  Payback period  Discounted payback method  Net present value method  Internal rate of return
  4. 4. INVESTMENT PROPOSALS • Mutually Exclusive Investment Proposals • Contingent Investment Proposals • Independent Investment Proposals • Replacement
  5. 5. PRINCIPLES OF CAPITAL EXPENDITURE PROPOSALS • Careful Estimate of amount to be invested • Creative search for profitable opportunities • Estimation of future revenue & expenditure • Considering Non-Monetary factors influencing decisions • Screening & Selection • Forms & Procedures: Preparation of reports necessary for capital expenditure program
  6. 6. THANK YOU

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