6. Capital Budgeting

	A	B	C	E	F	H	K
1			Capital Budgeting Analysis for			Capital Budgeting Analysis, Template Studi Kelayakan
2			Medical Services
3
4	Purpose of Spreadsheet
5							Lead Wks
6	Illustrate concepts related to capital budgeting analysis of projects. Certain aspects of a capital						Project A
7	project may have not been included in order to help highlight basic concepts, such as						Project B
8	Net Present Value. The spreadsheet is setup to evaluate six different projects and summarize						Project C
9	all projects based on both economic analysis and risk factors assigned.						Project D
10	Note: The Solver feature of Excel is used in an example at the end.						Project E
11							Project F
12							Summary
13	Economic Analysis
14
15	Three economic criteria are applied to projects: Net Present Value, Modified Internal Rate of
16	Return and Discounted Payback Period. If your project(s) have non-periodic payments
17	(payments are not equal over the life of the project), then you should use these Excel Functions:
18	=XNPV for Net Present Value by entering specific dates of cash flows
19	=XIRR for Internal Rate of Return by entering specific dates of cash flows
20
21	Cell Indicators
22
23	Certain cells are highlighted as follows:
24
25			Selected input cells (not all input cells are highlighted since each project is unique)
26			Cell includes a comment - move mouse and point over cell for comment
27			Indication of an error in calculation or a red flag that a criteria has not been met
28
29	Organization of Spreadsheet
30
31			Lead Worksheet
32			Project A Analysis - Example with Annual Cash Flow Calculations
33			Project B Analysis - Example with Sunk Costs & Projected Financials
34			Project C Analysis - Example of Upgrade Investment
35			Project D Analysis - Example of Project Financing
36			Project E Analysis - Example of Foreign Investment
37			Project F Analysis - Example of Monthly Inflows / Outflows
38			Summary and Example of Using Excel Solver
39			Answer Report 1 - Output from Using Excel Solver in Summary Example
40
41	General Input
42		The following general inputs have been used on different worksheets:
43
44		A	Diesel Generation System		<= Enter project name
45		B	New Clinic		<= Enter project name
46		C	Upgrade to DuBois Center		<= Enter project name
47		D	Southeastern Upgrades		<= Enter project name
48		E	Canadian Partnership		<= Enter project name
49		F	Regulatory Compliance NE		<= Enter project name
50				27.50%	<= Marginal Tax Rate *
51				9.50%	<= Weighted Average Cost of Capital
52				$10,000	<= Threshold investment amount where formal project analysis
53					is not required - general expenditure item.
54
55		* If you expect changes in future tax rates, you may want to consider these changes
56		in your analysis.
57
58	Project Codes (Used to help categorize various capital projects)
59
60		Project Classification Codes:
61		1	Land
62		2	Buildings
63		3	Leasehold Improvement
64		4	Equipment
65		5	Furniture and Fixtures
66		6	Vehicles
67		7	Acquisitions
68		8	Investments
69		9	Other
70
71		Primary Justification for Project:
72		A	Cost Reduction
73		B	Replacement
74		C	Expansion / Addition
75		D	Service Improvement
76		E	Safety & Compliance
77		F	Operating Necessity
78		G	Other
79
80		Priority Code:
81		1	Carry over project, already in progress, requires additional funding
82		2	Essential for continued operations, regulatory compliance, etc.
83		3	Economically desired for revenue growth, cost reductions, etc.
84		4	General improvement for building or expanding the business
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