Capital Budgeting: (Real) Investment Appraisal

Ivan K. Cohen

Chapter 6 in Focus on Finance:Everything You Need to Know About Financial Management, 2026, pp 117-143 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Investment is an immediate outlay of funds (costs) in the expectation of future benefits (revenues). To appraise an investment in a scientific manner costs and benefits must both be measurable in quantifiable terms, i.e., priced in monetary terms. Decision-making is a process of weighing up the costs of the investment against the expected benefits, all in present value (PV) terms. If benefits outweigh costs the investment would be worthwhile. Larger firms typically appraise a range of possible investment projects, ranking them according to specified criteria. This chapter examines various techniques for comparing investment costs with (expected) investment benefits…

Keywords: Finance; Financial Management; Finance Theory; Corporate Restructuring; Financial Forecasting; Mergers and Acquisitions; M&A; Fintech; Central Bank Digital Currencies; Cryptocurrencies; Digital Finance; Valuation; Company Valuation; Corporate Restructuring; Pensions; Financial Markets; Financial Institutions (search for similar items in EconPapers)
JEL-codes: G11 G17 G30 G31 G32 (search for similar items in EconPapers)
Date: 2026
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