MAF2

Syllabus D4. Capital budgeting and discounted cash flows 4 / 5

a) Capital investment planning and control.
b) Capital and revenue expenditure.
c) Steps in the preparation of a capital expenditure budget.
d) Simple and compound interest.
e) Compounding and discounting.
f) Cash flow and profit and the relevance of cash flow to capital investment appraisal.
g) Relevant cash flows for individual investment decisions.
h) Net present value (NPV) and internal rate of return (IRR) methods of discounted cash flow.
i) Present value using annuity and perpetuity formulae.
j) NPV, IRR and payback (discounted and non-discounted).
k) Interpret the results of NPV, IRR and payback.
Capital budgeting and discounted cash flows