Energy Cost Control: Show Me the Money! A Financial Calculator
Capital Investment Decisions Chapters 13 & 14 ME 2027 Performance and Cost Analysis ME 2605 Cost...
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Transcript of Capital Investment Decisions Chapters 13 & 14 ME 2027 Performance and Cost Analysis ME 2605 Cost...
![Page 1: Capital Investment Decisions Chapters 13 & 14 ME 2027 Performance and Cost Analysis ME 2605 Cost Management and Control (for IMIM) Håkan Kullvén, KTH,](https://reader036.fdocuments.in/reader036/viewer/2022082712/56649ea25503460f94ba5542/html5/thumbnails/1.jpg)
Capital Investment Decisions
Chapters 13 & 14ME 2027 Performance and Cost Analysis
ME 2605 Cost Management and Control (for IMIM)
Håkan Kullvén, KTH, 2007
![Page 2: Capital Investment Decisions Chapters 13 & 14 ME 2027 Performance and Cost Analysis ME 2605 Cost Management and Control (for IMIM) Håkan Kullvén, KTH,](https://reader036.fdocuments.in/reader036/viewer/2022082712/56649ea25503460f94ba5542/html5/thumbnails/2.jpg)
The investment process
1. Search for investment opportunities
2. Initial screening
3. Project authorizations
4. Control during the installation stage
5. Post-completion audit
![Page 3: Capital Investment Decisions Chapters 13 & 14 ME 2027 Performance and Cost Analysis ME 2605 Cost Management and Control (for IMIM) Håkan Kullvén, KTH,](https://reader036.fdocuments.in/reader036/viewer/2022082712/56649ea25503460f94ba5542/html5/thumbnails/3.jpg)
The cost of capitalFigures 13.1 page 495, and 13.2 page 497
![Page 4: Capital Investment Decisions Chapters 13 & 14 ME 2027 Performance and Cost Analysis ME 2605 Cost Management and Control (for IMIM) Håkan Kullvén, KTH,](https://reader036.fdocuments.in/reader036/viewer/2022082712/56649ea25503460f94ba5542/html5/thumbnails/4.jpg)
CompoundingExample 13.1 page 497
![Page 5: Capital Investment Decisions Chapters 13 & 14 ME 2027 Performance and Cost Analysis ME 2605 Cost Management and Control (for IMIM) Håkan Kullvén, KTH,](https://reader036.fdocuments.in/reader036/viewer/2022082712/56649ea25503460f94ba5542/html5/thumbnails/5.jpg)
DiscountingExample 13.2 page 499
![Page 6: Capital Investment Decisions Chapters 13 & 14 ME 2027 Performance and Cost Analysis ME 2605 Cost Management and Control (for IMIM) Håkan Kullvén, KTH,](https://reader036.fdocuments.in/reader036/viewer/2022082712/56649ea25503460f94ba5542/html5/thumbnails/6.jpg)
DiscountingExample 13.2 page 499
![Page 7: Capital Investment Decisions Chapters 13 & 14 ME 2027 Performance and Cost Analysis ME 2605 Cost Management and Control (for IMIM) Håkan Kullvén, KTH,](https://reader036.fdocuments.in/reader036/viewer/2022082712/56649ea25503460f94ba5542/html5/thumbnails/7.jpg)
Rate of return
•Above is the internal rate of return
•Accounting rate of return is average profit divided by average investment
−Will be discussed in lecture about SBUs
Example 13.1 page 500. Project A
![Page 8: Capital Investment Decisions Chapters 13 & 14 ME 2027 Performance and Cost Analysis ME 2605 Cost Management and Control (for IMIM) Håkan Kullvén, KTH,](https://reader036.fdocuments.in/reader036/viewer/2022082712/56649ea25503460f94ba5542/html5/thumbnails/8.jpg)
Payback
•Ignores time-value of money
•Ignores cash-flow after the payback period
Example not in book
![Page 9: Capital Investment Decisions Chapters 13 & 14 ME 2027 Performance and Cost Analysis ME 2605 Cost Management and Control (for IMIM) Håkan Kullvén, KTH,](https://reader036.fdocuments.in/reader036/viewer/2022082712/56649ea25503460f94ba5542/html5/thumbnails/9.jpg)
Special considerations
• What investment to choose?−If unequal lives
• The effects of taxation
• The effects of inflation
• Risk-adjusted discount rates
![Page 10: Capital Investment Decisions Chapters 13 & 14 ME 2027 Performance and Cost Analysis ME 2605 Cost Management and Control (for IMIM) Håkan Kullvén, KTH,](https://reader036.fdocuments.in/reader036/viewer/2022082712/56649ea25503460f94ba5542/html5/thumbnails/10.jpg)
Next, we…
are going to learn how to take a
glance in the Crystal Ball, and make
plans for the future. It is, in other
words, time to take a look at the so-
discussed topic of budgeting
Chapter 15