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Level 6 Diploma in Business Management

Capital Expenditure Appraisal Techniques

BM604 · Financial Decision Making — Week 7 of 16

CourseBM604
Week7 of 16
SemesterII
TutorOnline in the course chat

This week’s topics

Capital Expenditure Appraisal Techniques

  1. Net Present Value (NPV) and cash flow discounting
  2. Internal Rate of Return (IRR)
  3. Payback period and discounted payback
  4. Accounting Rate of Return (ARR)
  5. Capital budgeting techniques
  6. CIMA P2 Discounted Investment Appraisal Techniques - Net present Value, IRR
  7. CIMA P2 Basic Investment Appraisal Techniques – ARR and Payback

What you will be able to do

  • 2.4 Differentiate between financial decisions relating to capital expenditure and those relating to revenue expenditure.
  • 3.3 Evaluate various techniques used for appraising and making decisions regarding capital expenditure.

Activity

Start with this week’s 3 videos, then: Seminar, guided reading and a short written task: differentiate between financial decisions relating to capital expenditure and those relating to revenue expenditure.

Study materials

Videos

  • Capital budgeting techniques · YouTube · The Finance Storyteller · 34 min · for registered students
  • CIMA P2 Discounted Investment Appraisal Techniques - Net present Value, IRR · YouTube · OpenTuition · 36 min · for registered students
  • CIMA P2 Basic Investment Appraisal Techniques – ARR and Payback · YouTube · OpenTuition · 18 min · for registered students
  • Session 14: Beyond NPV · YouTube · Aswath Damodaran · 87 min · for registered students
  • Session 14 (MBA): To NPV and beyond.. · YouTube · Aswath Damodaran · 87 min · for registered students
  • Session 15 (Undergraduate): NPV vs IRR, Side Costs and Side Benefits · YouTube · Aswath Damodaran · 82 min · for registered students
  • Session 14: Equity Analysis, Acquisition Valuation and NPV vs IRR · YouTube · Aswath Damodaran · 90 min · for registered students

Further resources

  • Managerial Accounting, ch. 8: How Is Capital Budgeting Used to Make Decisions? · PDF · Saylor Academy, textbook chapter; pp. 472–540 · for registered students
  • Principles of Accounting, Volume 2: Managerial Accounting, ch. 11: Capital Budgeting Decisions · PDF · OpenStax, textbook chapter; pp. 517–564 · for registered students
  • Principles of Accounting Vol. 1, ch. 11.2: Capital versus revenue expenditure · PDF · OpenStax, textbook chapter; pp. 642–644 · for registered students
Materials marked “for registered students” open in the student portal, which is set up as soon as you receive final acceptance.
Week 6Midterm
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Course plan
  • Week 1: Strategic Business Decision Making and Financial Drivers
  • Week 2: Business Risk Assessment in Financial Decisions
  • Week 3: Accounting Foundations and Expenditure Classification
  • Week 4: Structure and Interpretation of Final Accounts
  • Week 5: Financial Performance Metrics and Long-Term Sustainability
  • Week 6: Sources and Selection of Business Finance
  • Week 7: Capital Expenditure Appraisal Techniques
  • Midterm: Midterm evaluation
  • Week 9: Off-Balance Sheet Financing and Risk Management
  • Week 10: Ownership Structures, Governance and Agency Dynamics
  • Week 11: Ethics, Governance Controls and Financial Accountability
  • Week 12: Applying Financial Decision Making in practice: case studies
  • Week 13: Assignment workshop: research, planning and referencing
  • Week 14: Assignment workshop: drafting, feedback and improvement
  • Week 15: Review and coursework completion
  • Final: Final assessment and submission
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