Questions tagged [capital-budget]

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1answer
53 views

Calculation of Regulatory Capital

As per my understanding, the Regulatory capital for a Financial institution is calculated as sum of ...
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2answers
292 views

Valuing Acquisition Target Case Study - DCF and IRR?

Wondering how best to answer a case study I need to do. Case study info as follows: Given Selling company's P&L (3 years actual, 4 years forecast) - closing date on end of year 3 - and a PPT of ...
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1answer
198 views

IRR for multiple series of cash flows

I have a question on how to calculate a single IRR for a group of projects that have different start dates, but have been sold on the same date. This causes the aggregate cash flows to go from ...
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3answers
9k views

Why do not include loan payments in NPV?

Textbooks in finance claim that one should not include financial cashflows in capital budgeting. I get the idea of not including interest (as it should be included in the cost of capital), but I don't ...
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1answer
2k views

Why financing costs are ignored in capital budgeting of projects?

Any finance textbook I have encountered including CFA materials states something like this: "Financing costs are ignored. This may seem unrealistic, but it is not. Most of the time, analysts want to ...
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2answers
89 views

cost of capital alternatives

I've just started an msc in economics and finance and have to write a short essay. the topic is that the cost of capital is by far the most important thing for a business to consider before it invests....
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2answers
872 views

CAPM betas at different horizons

When taking capital budgeting decisions appropriate cost of capital should depend on the horizon of the investment. So the beta of a stock, i.e. it's covariance with the market should depend on the ...
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2answers
3k views

Using Forward or Spot rates for NPV?

I have to calculate the NPV for Capital Budgeting in a project with annual cash flows discounted by a risk - free interest rates 1.Instead of using a constant interest rate, should it better to use ...