How to evaluate capital expenditures and other long-term investments
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Evaluate capital and other long-term investments 

How to evaluate capital expenditures and other long-term investments 

January 27 2012

Evaluating capital expenditures and long-term investments is a critical process for businesses. Better-managed organisations view all long-term programmes (capital and non-capital) in a disciplined environment.

This resource will explore some of the unique issues concerning budgeting and evaluating, financing, and managing a variety of activities.

In addition to typical capital projects, expenditures such as R&D, IT, advertising, training, and even planned builds in working capital can be viewed as long-term programmes. These all consume cash in anticipation of future pay out. 

 CGMA professionals can use this tool to help

  • Compare evaluating long-term projects with an acquisition.
  • Discuss the role of budgeting.
  • Examine the impact of capital projects on cost structure.
  • Explore IRR as an evaluation tool and compare it to the present value approach.
  • Understand the basic concepts of financing and hedging. 

There are two examples of investment analyses using discounted cash flow evaluation techniques, complete with downloadable Excel spreadsheets. The examples calculate net present value and the internal rate of return (IRR) for each project, showing how management can use the information to evaluate capital expenditures and allocate capital in their annual planning process.

Download the tool

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6 Comments


Comments
BelindaRubio

Is there a way to download this to ipad? I tried several times but it didn''t work.

Jul 24, 2012 10:09 PM
Comments
BelindaRubio
Jul 24, 2012 9:54 PM
Comments
Edmund Lund

Emily, I was able to unzip the file using 7-zip. As the spreadsheet is an XLSX file type, you may have trouble opening it  if you are not using the latest version of Excel. Try using Open Office Calc or Libre Office Calc these have worked for me.

Feb 9, 2012 8:52 AM
Comments
Thomas Howard

The file and written procedure are well contructed and clear.  I work with small growing businesses and this will provide a good process for discussing capital and R&D spending.

Tom Howard

Feb 5, 2012 6:41 AM
Comments
Modesto Matheu

Emily, I open and downloaded the file without any issues, you can send me an email and I can send you the documents.

modestomatheu@embarqmail.com

Thanks,

Modesto Matheu, CPA, CGMA, CIA, CBM

Feb 3, 2012 8:20 PM
Comments
Emily Henderson

The zip file is unreadable with I open it.

Feb 1, 2012 7:01 AM
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