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Course Description:
Capital investments are long-range decisions that usually
involve large sums of money and have uncertain outcomes. Should we use
the most advanced technology in our products? Should we invest in a
company-wide training program? Should we upgrade our voice and data
communications system?
This seminar is a comprehensive one-day course on
capital investments for financial and non-financial managers. It
covers the nature of capital investments, project cost classifications,
asset impairment, capital budgeting, how to perform the financial
evaluation of a capital project, capital projects administration, and
post-implementation reviews.
In this seminar you will learn to identify and
classify project costs between capital and expense items. You will
study the concept of asset impairment, its importance, and how to
identify events that may trigger this situation. You will gain
knowledge on how to prepare a capital budget request and develop a solid
business case for your projects. You will examine the difference
between cost savings and cost avoidance and how these concepts are used
in the financial analysis and justification of a capital project. You
will learn and practice how to perform a financial evaluation of capital
investment projects, including how to calculate and interpret common
return on investment (ROI) measures such as the accounting rate of
return, payback period, net present value, and internal rate of
return. Alternatives for evaluating project risk, including an
introduction to Monte Carlo simulations, will also be discussed.
Finally, we will discuss the administration of
capital projects and the importance of post-implementation reviews as a
learning tool for future capital investments.
Pre-requisites:
This course is taught at an intermediate level.
Participants should have a basic understanding of financial information
and cost concepts before taking this course.
Pre-work: Not required.
Who should attend:
Managers and supervisors in manufacturing or service
industries, entrepreneurs, business owners, professional employees
(planners, engineers, buyers, analysts), CPAs, CMAs, financial
accountants, financial analysts
Course Objectives:
Upon completion of this seminar, the participant will be able to:
- Describe the capital investment cycle.
- Identify and classify project costs.
- Define asset impairment and identify potential
exposures.
- Budget and justify capital expenditures.
- Prepare and document a business case.
- Perform a financial evaluation of a capital
project.
- Describe how approved capital projects are
typically managed.
- Explain the post-implementation review
process.
Course content:
- The nature of capital investments
- The capital investment cycle
- Capitalization policy and project cost
classification
- The concept of asset impairment and events that
may trigger an impairment situation
- The capital budgeting process
- How to prepare an expenditure authorization
request
- Cost savings and cost avoidance
- The financial evaluation
- Identifying cash flows
- Preparing and interpreting the financial
analysis
- Payback
- Discounted payback
- Net present value (NPV)
- Internal rate of return
- Risk assessment
- How to classify risk and urgency
- Qualitative factors
- Sensitivity analysis
- Monte Carlo Simulations
- Real options theory
- Capital projects administration
- Post-implementation review
Instructional method used:
Instructor-led
Recommended CPE:
7 credit hours
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