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Capital Budgeting
Topic Outline
Classification of Investment Projects
Business Proposals
Decision Criteria
Independent and Mutually Exclusive Programs
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CF0 = cash flow in time period zero (today); this is usually the cost of the project and is a negative cash flow

CF 1, 2, …n = cash flow in period 1, 2, …n; for "normal" projects (to be defined later), these are the positive cash flows the project is expected to produce

NPV = Net Present Value

IRR = Internal Rate of Return

k = required rate of return for the project; this is the firm's WACC if the project is of the same risk level as the firm's overall level of risk  

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