The Asset Investment Decision (Capital Budgeting), James Tompkins

This is the third lecture of the Corporate Finance series in which I discuss what I call the "Asset Investment" decision or what is more commonly referred to as "Capital Budgeting". For example, the decision that Apple made to spend money developing the iPhone would be an asset investment decision. I begin by assuming the "relevant" cash flows for the asset investment decision and discuss analytical techniques including net present value, payback period, internal rate of return and profitability index. I then discuss other issues such as the optimal time to make such a decision and "equivalent annual cost". I conclude with a determination of the "relevant" cash flows for the asset investment decision. As always, my goal is not to have you memorize a bunch of formulas, but rather to understand both their derivation as well as the pros and cons of their application in real life.

[@Sarahkay254]

gone through your whole series .I would love to be in your class.I think you are agreat teacher and a perfect communicator.Thank you and be blessed!

[@karanbirsingh7822]

These videos have a lot of value. Thank you, sir, for your efforts plus your LinkedIn profile inspires me a lot to advance my career in finance.

[@understandingfinance]

That's great! Thanks.

[@baloney_sandwich]

take the class

[@kimmckersie9661]

Thank you so much for posting! Very clear, and extremely helpful presentation, I will be sure to view all in the series :)

[@understandingfinance]

Thanks for your kind words. :)

[@traceynoelzinord7772]

You are appreciated! Your videos are so helpful!

[@understandingfinance]

+Tracey N Thanks Tracey. :)

[@c_v5567]

your videos are all i need for exam prep ! thank you so much !!

[@understandingfinance]

chandana v Great!! You are welcome.

[@zvonest4]

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[@ratanmajumder8051]

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[@Onlybelieveable]

Good job...You are an appreciating asset

[@understandingfinance]

Thanks :)

[@sharatchandra2418]

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[@understandingfinance]

Your welcome and thanks. :)

[@Clifffffffffford]

Thanks!

[@ahmadbajwa7514]

excellent *****

[@understandingfinance]

+Ahmad Bajwa Thanks!

[@kndlite]

I've just started watching your videos and I liked the intro to corp finance, do you have the second lecture on youtube? :)

[@understandingfinance]

Thanks. Glad you are finding the lectures useful. Below is the
Corporate Finance Lecture Series. In addition, if you are interested I have a lecture series in both Advanced Corporate Finance and International Finance.
1. Introduction to Corporate Finance, James Tompkins
2. Time Value of Money: Single Cash Flows, James Tompkins
3. Time Value of Money: Multiple Cash Flows, James Tompkins
4. The Asset Investment Decision (Capital Budgeting), James Tompkins
5. Valuation of Stocks and Bonds, James Tompkins
6. The Discount Rate for Financial Securities (Risk and Return), James Tompkins
7. The Discount Rate for the Asset Investment Decision (Capital Budgeting), James Tompkins
8. Levered and Unlevered Beta, James Tompkins

[@kndlite]

thank you!

[@ayem5]

I was wondering whether you have any videos on multinational or overseas capital budgeting....I'm not being able to find any related videos. Please Help!

[@understandingfinance]

Ayem Changkija You may want to do a search on the International Cost of Capital. I do not cover that in any of my videos yet. Good luck.

[@wajidazeemfy]

You are awesome..
Please allow me to request for your words on below..( at 1:40:14)
My understanding is that the working capital changes figure, that is relevant to cash flows, exclude changes in bank balances and short term loans... I justify this by keep telling myself that Bank balances and short term loans are not "operational" in nature... Is there any better or (let's say) correct explanation to that?
My name is Wajid

[@cc2752]

You just need to be in every university !!!

[@understandingfinance]

Thanks