Capital Budgeting Valuation Financial Analysis for Today's Investment Projects

by Baker, H. Kent; English, Philip

• ISBN13: 9780470569504
• ISBN10: 0470569506
• Edition: 1st
• Format: Hardcover
• Copyright: 2011-06-28
• Publisher: Wiley

Summary

An essential guide to valuation techniques and financial analysisWith the collapse of the economy and financial systems, many institutions are reevaluating what they are willing to spend money on. Project valuation is key to both cost effectiveness measures and shareholder value.The purpose of this book is to provide a comprehensive examination of critical capital budgeting topics. Coverage extends from discussing basic concepts, principles, and techniques to their application to increasingly complex, real-world situations. Throughout, the book emphasizes how financially sound capital budgeting facilitates the process of value creation and discusses why various theories make sense and how firms can use them to solve problems and create wealth. Offers a strategic focus on the application of various techniques and approaches related to a firm's overall strategy Provides coverage of international topics based on the premise that managers should view business from a global perspective Emphasizes the importance of using real optionsComprised of contributed chapters from both experienced professionals and academics, Capital Budgeting Valuation offers a variety of perspectives and a rich interplay of ideas related to this important financial discipline.

Author Biography

H. Kent Baker, PhD, CFA, CMA, is University Professor of Finance and Kogod Research Professor at the Kogod School of Business at American University, Washington, D.C. He has published extensively in leading academic and professional finance journals including the Journal of Finance, Journal of Financial and Quantitative Analysis, Financial Management, Financial Analysts Journal, and Journal of Portfolio Management. Recognized as one of the most prolific authors in finance during the past fifty years, Professor Baker has consulting and training experience with more than 100 organizations and has been listed in fifteen biographies.

Philip English is an Assistant Professor of Finance and Real Estate at the Kogod School of Business, American University. He currently serves as Director of the Master of Science in Finance and Master of Science in Real Estate programs. Before pursuing a doctorate, English worked as the primary financial officer and director of product development for Campbell Classics, a Virginia-based manufacturing firm. Professor English's research interests focus on the role of the legal environment in emerging markets, corporate governance, and mutual fund regulation. He has published in the Journal of Financial Research, Journal of Corporate Finance, Journal of Law and Economics, and Emerging Markets Review.

Table of Contents

Acknowledgments	p. ix
Capital Budgeting: An Overview	p. 1
Foundation and Key Concepts	p. 17
Corporate Strategy and Investment Decisions	p. 19
Corporate Governance and Investment Decisions	p. 37
Capital Investment Choice	p. 57
Measuring Investment Value: Free Cash Flow, Net Present Value, and Economic Value Added	p. 59
Alternative Methods of Evaluating Capital Investments	p. 79
Capital Rationing for Capital Budgeting	p. 95
Analyzing Foreign Investments	p. 111
Postcompletion Auditing of Capital Investments	p. 131
Capital Budgeting Techniques in Practice: U.S. Survey Evidence	p. 151
Project Cash Flows and Inflation	p. 173
Estimating Project Cash Flows	p. 175
Capital Budgeting and Inflation	p. 197
Risk and Investment Choice	p. 215
Basic Risk Adjustment Techniques in Capital Budgeting	p. 217
Capital Budgeting with Political/Country Risk	p. 241
Risk Management in Project Finance	p. 259
Risk Simulation Concepts and Methods	p. 279
Real Options and Project Analysis	p. 299
Real Options Analysis: An Introduction	p. 301
Applications of Real Options Analysis	p. 321
Estimating the Project Cost of Capital	p. 337
Cost of Capital: An Introduction	p. 339
Using the Capital Asset Pricing Model and Arbitrage Pricing Theory in Capital Budgeting	p. 363
Financing Mix and Project Valuation: Alternative Methods and Possible Adjustments	p. 381
Special Topics	p. 403
Capital Budgeting for Government Entities	p. 405
Decision Making Using Behavioral Finance for Capital Budgeting	p. 421
Merger and Acquisition Pricing: The Valuation of Synergy	p. 445
Multicriteria Analysis for Capital Budgeting	p. 463
Answers to Discussion Questions	p. 483
Index	p. 507
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