maxicapital

planning and evaluation of capital expenditures

• capital budgeting on the long run
• forecast of markets revenues, costs, expenses and profit.
• project generally affects marketing, engineering, manufacturing and finance.
• Probability analysis of success/ failure
• project planning
• evaluation and decision making
• control and audit of cash commitments
• post audit evaluating and reporting of results.
• project evaluation cash flow methods
• the personal judgments and preferences of the project
• project generally affects marketing, engineering, manufacturing, and finance.
• Probability analysis of success/failure
• control and audit of cash
• source of funds and spending schedules
• capital investments on a cash basis
• pro forma statements standard economic model Benefits - costs = cash flow
• economic model: Benefits minus costs equals cash flow
• sales revenues and other income
• Costs for fixed assets, investments in working capital payrolls, materials, and expenses.
• opportunity cost for alternatives
• discounting funds
• capital expansion until the marginal cost of capital equals its marginal revenuet
• General business conditions and the state of optimism/pessimism
• interest rates or projected return
• NPV exceeds the combined cost of capital
• discount factor remains constant no matter what the risk
• uncertain project average success/failure needs higher rate of return or when at the limit NPV equals zero
• Sensitivity Analysis with different options
• Probability Adjustment

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