Financial Management - Basic Principles Capital Expenditure Proposals.

1. BASIC PRINCIPLES OF
CAPITAL
EXPENDITURE
PROPOSALS
ASNAD P A
II SEM MBA

2. CAPITAL EXPENDITURE
PROPOSALS
• Capital Expenditure Proposal is a formal request
to undertake capital expenditures.
• Capital Expenditure is the money spent to
acquire or upgrade physical assets such as
buildings and machinery.

3. CAPITAL EXPENDITURE
PROPOSALS
The proposed projects will be ranked
according to a criteria.
• Methods used for ranking are:
 Payback period
 Discounted payback method
 Net present value method
 Internal rate of return

4. INVESTMENT PROPOSALS
• Mutually Exclusive Investment Proposals
• Contingent Investment Proposals
• Independent Investment Proposals
• Replacement

5. PRINCIPLES OF CAPITAL
EXPENDITURE PROPOSALS
• Careful Estimate of amount to be invested
• Creative search for profitable opportunities
• Estimation of future revenue & expenditure
• Considering Non-Monetary factors influencing
decisions
• Screening & Selection
• Forms & Procedures: Preparation of reports
necessary for capital expenditure program

6. THANK YOU