Accounting › Section X · Capital budgeting decisions › Topic X.1
Capital investment decisions
Buying a machine, opening a branch or launching a product ties up a large sum for years. Capital investment decisions settle which of these long-term projects a company funds, and this topic sets out the process and the cash flows every later method relies on.
In this topic
- What a capital investment is
- Kinds of capital projects
- A step-by-step process
- Screening and preference decisions
- Limited resources and capital rationing
- Which cash flows count
- Worked example: a replacement decision's cash flows
- Worked example: screening and ranking under a budget
- Beyond the numbers
- Common mistakes to avoid
- Key takeaways
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