Budgeting: Capital Budgeting

Audience

Managers who want to gain advanced competency in the areas of budgeting and capital investing.

Objective

• Provided a scenario correctly identify the capital budgeting decision being made.
• Calculate the depreciation of an asset using the straightline method.
• Identify and apply formulas for discounting cash flow.
• Calculate discount rates.
• Sequence the steps managers should follow when justifying a capital project.
• Select capital investment opportunities using different evaluation methods.

Topics Include

Unit 1: Introduction to Capital Budgeting

• Provided a scenario correctly identify the capital budgeting decision being made.
• Calculate the depreciation of an asset using the straight-line method.
• Define capital budgeting terms.
• Calculate depreciation of capital investments.
• Complete the future value equation.
• Identify and apply formulas for discounting cash flow.
• Identify the different types of discount rates.
• Calculate discount rates.
• Simulation Overview:
• In this simulation you will meet with Mary Aberdeen a Controller in Icon's Consumer Products and Services division in Chicago. Mary has invited you as a Budget Accountant to cross-train with her so that you can expand your financial accounting knowledge and assist her with budget preparation on upcoming capital projects. To determine your preparedness for this added responsibility she will ask you to define capital budgeting terms and calculate depreciation as it relates to capital investments. She will also ask you to identify and apply formulas for discounting cash flow and figuring discount rates. If you are successful in doing so she will give you the task of reviewing the current capital budget requests she is considering and promote your title to that of Budget Coordinator.

Unit 2: The Capital Budgeting Process

• Sequence the steps of the capital budget process.
• Identify information that should be included in a capital budget.
• Sequence the steps managers should follow when justifying a capital project.
• Follow the process for defending a capital project.
• Simulation Overview:
• In this simulation you will meet with John Cunningham the Vice President of Production in the Chicago Consumer Products and Services division. On behalf of this division you have drawn up plans to create a showroom facility in which the consumer appliances Icon manufactures would be exhibited in the environment in which they're intended to be used. Your aim in doing so is to attract smaller service oriented dealerships to carry your product and to move into the specialty products market thereby increasing profit margins. As the Sales Manager for the Production area it is your responsibility to present a budget proposal for this capital improvement project to the managerial and finance team that considers appropriation requests. If you correctly follow the steps of the capital budgeting process and successfully justify your request your showcase facility will be funded.

Unit 3: How Capital Budgets are Evaluated

• List the steps of the approval process.
• Identify the steps of the budget approval process.
• Select capital investment opportunities using different evaluation methods.
• Select methods used to evaluate capital investment opportunities.
• Simulation Overview:
• Simulation Overview:

Duration

4

Minimum Requirements

The CDROM version of this course requires:

• At least a 486DX 33Mhz CPU.
• Microsoft Windows 3.1 or higher and a Microsoft compatible mouse.
• At least 8MB RAM.
• At least VGA graphics capability with a minimum 512K video RAM (1MB video RAM recommended).
• At least a double speed CDROM drive.
• An MPC compliant sound card with attached speakers or headphones is recommended (Currently only the CDROM version supports audio).

• At least a 486DX 33Mhz CPU.
• Microsoft Windows 3.1 or higher and a Microsoft compatible mouse.
• At least 8MB RAM and 22MB available hard disk space or file server space.
• At least VGA graphics capability with a minimum 512K video RAM (1MB video RAM recommended).

Media