How is Capital Budgeting Used to Make Decisions?

Read this section, which discusses capital budgeting and decision-making, net present values, annuity tables, and internal rate of return. Large corporations use capital budgeting techniques when investing in real estate projects or large equipment projects.

Appendix

Present Value Tables

Figure 8.9 Present Value of $1 Received at the End of n Periods


Note: Factor = \dfrac{a}{(1+r)^n}


Figure 8.10 Present Value of a $1 Annuity Received at the End of Each Period for n Periods


Note: Factor = \dfrac{1-(1+r)^{-n}}{r}