Capital Budgeting - FULL EXAMPLE | Investment Appraisal | NPV

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  • Опубліковано 19 чер 2024
  • In this lesson, we explain Capital Budgeting and go through a thorough Example of Capital Budgeting (Investment Appraisal). In the example, we explain how to account for items such as Sunk Costs, Head Office Costs, Past Feasibility Study Costs, Employee Salary Costs, Salvage Value/Recoupment, Wear and Tear Allowance, Tax Shield or Tax Saving On Depreciation, Tax on Salvage Value, After-Tax Salvage Value and many more. We also explain what you do with a Bank Loan and its Interest Expense when dealing with Capital Budgeting/Investment Appraisal.
    We show how to discount cash flows in calculating the Net Present Value (NPV) using the Weighted Average Cost of Capital (WACC).
    Relevant Costs Explained: • Relevant Costs | Expla...
    Salvage Value & Wear and Tear Explained with EXAMPLES | CAPITAL BUDGETING: • Salvage Value & Wear a...
    NPV (Net Present Value) Using Financial Calculator | Sharp EL-738: • NPV (Net Present Value... `
    Net Present Value (NPV) Calculation Example Using Table: • Net Present Value (NPV...
    IRR (Internal Rate of Return) Explained with Example: • IRR (Internal Rate of ...
    Net Present Value (NPV) Calculation Example Using Excel: • Net Present Value (NPV...
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КОМЕНТАРІ • 32

  • @malcolmjohnston6731
    @malcolmjohnston6731 3 роки тому +5

    This was absolutely brilliantly presented. One would even understand without any background. Thank you very much.

  • @ameliakoopman4435
    @ameliakoopman4435 3 роки тому +1

    I just love your explanations and videos. Simplified and relevant.

  • @athinithinini5271
    @athinithinini5271 2 роки тому +3

    The best explanation ever!

  • @BotsheloSenakgomo
    @BotsheloSenakgomo Місяць тому

    This is awesome. Thank you

  • @ensoivanhaynie6009
    @ensoivanhaynie6009 Рік тому

    Very good way of explaining and thought processing, using this in my final year. Thank you so much

  • @Katkasica
    @Katkasica 4 роки тому +5

    I really enjoyed this video. Simple and easy to understand. I'm surprised it has such low views.

    • @Counttuts
      @Counttuts  4 роки тому +2

      Thank you for the kind feedback :)

  • @nkululekogugumoloi2459
    @nkululekogugumoloi2459 3 роки тому +2

    very insightful video. very simple to understand.

  • @user-pi8vm9hl5z
    @user-pi8vm9hl5z 7 місяців тому

    Incredible Video, thank you.

  • @lynnettemasango2402
    @lynnettemasango2402 Рік тому

    Thank you very much. This has been helpful.

  • @mzamocele7096
    @mzamocele7096 Рік тому

    Great lecture! Thanks you sir

  • @kamohelomaleke9390
    @kamohelomaleke9390 Рік тому

    Thank you!!!!!

  • @sephaipaulmasike7001
    @sephaipaulmasike7001 7 місяців тому

    This explanation makes education easy.I have a quetion.What happens if we have to employ new employees for the project?

  • @logicsmathe4908
    @logicsmathe4908 2 роки тому

    Wow this content 🤞🙌

  • @nosawaruagbonlahor9469
    @nosawaruagbonlahor9469 9 місяців тому

    Thank you for this.
    I would like to find out what the working capital relates to - additionally is there a video I can refer to that will help me gain understanding on it?

  • @boitumelobonginkosikunene3547

    ❤❤❤❤❤❤❤❤THANK YOU

  • @paidamapanga5442
    @paidamapanga5442 2 роки тому

    is the depreciation always straight line method?

  • @OhohyaPepenor
    @OhohyaPepenor 3 роки тому

    If you're paying loan payments annually and the loan is for the project, why don't we account for the principal payments as an outflow? I understand that the interest is already accounted for in the WACC.

  • @ntcuong01ct1
    @ntcuong01ct1 3 роки тому +1

    Dear Friends,
    I have a case of capital budgeting:
    Example: I want to build new factory, I know the build cost is CAPEX budget and cash outflow.
    When the factory begin run, I need purchase raw materials, purchase labor, purchase overhead (water, electric,etc) to manufacture finished goods.
    I know this costs depreciation cost from this factory is OPEX cost.
    Question: With the capital budgeting, I will collect the CAPEX and OPEX inside a plan or separate plans?.
    Capital budgeting need to OPEX cost to run and examine efficiency of this factory, right?.
    Could you help?. Thank you.

  • @mbalisithole4928
    @mbalisithole4928 Рік тому

    I appreciate your help so much; this was great. However, I do have a question. When I try to calculate the NPV using my HP10bii+ calculator, I don't receive the same result as the one from Excel. What should I do in this situation given that using a calculator is considerably faster than using excel?

    • @Counttuts
      @Counttuts  Рік тому

      Hi, please see our lessons on HP 10bii+. Otherwise your answer should not be different apart from rounding off differences.

    • @jose-annnaidoo11
      @jose-annnaidoo11 4 місяці тому

      @@Counttutsplease could you put the link for this tutorial

  • @ntcuong01ct1
    @ntcuong01ct1 3 роки тому +1

    Dear Friends,
    I have 2 questions:
    1/ Can I create capital Budgeting include only 100% working capital, no fixed assets with project life is 5 years?.
    2/ When I create and review the capital Budgeting (example: build new factor or open new 100 shops), I can examine the cost of BOD (Board of directors) is a relevant cost of this project?.
    Thank you.

  • @MmampsN
    @MmampsN 4 роки тому

    What happens when there's a difference in tax allowance and depreciation?

    • @Counttuts
      @Counttuts  4 роки тому

      Watch this one: ua-cam.com/video/INDwk15EyoE/v-deo.html

  • @ntcuong01ct1
    @ntcuong01ct1 3 роки тому +1

    Dear Friends,
    I have a questions:
    1/ In the Capital Budgeting for 5 years, ABC company spent 500 million USD and borrowed 200 million USD from the bank. I want to calculate the break even point of of the capital budgeting. How do you do?.

  • @katlegomlangeni6618
    @katlegomlangeni6618 3 роки тому

    This loan is taken because of this new venture, why is it not relevant?

  • @ueritungahengua8256
    @ueritungahengua8256 3 роки тому +1

    I do not understand why 10% increase for the investment on working capital is calculated otherwise. The way you did it, is like your 10% on the initial investment is actually the one that's increasing by 10% per year, but the statement says that the investment is the one increasing by 10% per year.

    • @Counttuts
      @Counttuts  3 роки тому

      We actually did it correctly, I would suggest question and solution again.

    • @segunonipe6566
      @segunonipe6566 2 роки тому +1

      Profit margin = Gross profit/Sales.
      10% = Gross profit/2,000,000
      Gross profit = 10% of 2,000,000
      Gross profit = 200,000
      However, on the principle of:
      Net income = Revenue - Expenses;
      Gross profit = Sales - Cost of sales
      200,000 = 2,000,000 - Cost of sales
      Cost of sales = 2,000,000 - 200,000
      Cost of sales = 1,800,000
      However, quicker calculation is simply to minus 10% from 100% = 90% to get the cost of sales. Meaning, minus 200,000 from 2,000,000 = 1,800,000 as cost of sales. That's what the tutor did.

  • @alhasibushabani695
    @alhasibushabani695 2 роки тому

    Please help me to send another video to me because I don't understand because your voice is too small and your word in your slide is too small, result to unable to understand