Getting Started

An accurate discernment of the merits of a capital project is essential to the profitable growth of any business. Included is knowing the sources and cost of capital. Being able to evaluate potential projects and effectively communicate your insights is an essential skill.

Upon successful completion of the course material, you will be able to:

• Describe the capital budgeting process and the methods of evaluating projects.
• Apply biblical truth to capital budgeting.

Resources

• Bible
• Textbook: Foundations of Financial Management
• Website: Connect

Instructions

1. Review the rubric to make sure you understand the criteria for earning your grade.
2. Review Chapter 12 of Foundations of Financial Management.
3. In a Word document, prepare and submit the answers to the following questions:
   1. Why is capital budgeting such an important process? Why are capital budgeting errors so costly?
   2. What are the disadvantages of using the payback period as a capital budgeting technique? What are its advantages, and why is it so frequently used?
   3. Briefly compare and contrast the NPV, PI, and IRR criteria. What are the advantages and disadvantages of using each of these methods?
   4. What are “mutually exclusive” projects?
4. Your document should:
   1. Answer the questions stated above.
   2. Use proper spelling, grammar, APA formatting, and include citations as appropriate. For questions on APA style, go to OCLS APA Writing Style Guides.
5. When you have completed your assignment, save a copy for yourself and submit a copy to your instructor by the end of the workshop.