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Managerial Accounting
Introduction to Managerial Accounting
Jeannie M. Folk
Ray H. Garrison
Eric Noreen

Capital Budgeting Decisions

Learning Objectives

After studying Chapter 12, you should be able to:

1

Determine the acceptability of an investment project using the net present value method.

2

Prepare a net present value analysis of two competing investment projects using either the incremental-cost approach or the total-cost approach.

3

Rank investment projects in order of preference using the profitability index.

4

Determine the payback period for an investment.

5

Compute the simple rate of return for an investment.

6

(Appendix 12A) Explain the concept of present value and make present value computations.




McGraw-Hill/Irwin