Project Valuation and the Capital Budgeting Process

From projected cash flows to a decision

The course asks whether an engineering project is economically viable by running its projected cash flows through net present value, internal rate of return and payback period. It then adds depreciation, taxes, inflation and exchange rates, adjustments that can change the answer.

Who benefits

Engineers moving into project appraisal, finance staff who review capital requests, and students of engineering economics will recognise the toolkit. Basic present value ideas should feel familiar first, since this is the second course in its series.

• Recalculate one project's cash flows by hand before relying on a spreadsheet.
• Notice how a single adjustment, such as inflation, can flip a marginal decision.

The course also describes how companies make choices that shape their investment portfolio.