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Gigo garbage in, garbage out in capital budgeting

• If cash inflows are overestimated and/or the cost of capital underestimated, then decisions that prove to be very costly for the firm and the shareholders can result; poor forecasts can result in poor capital budgeting decisions.

 
 

Follow this link for all the terms related to capital.

 
 Embedded terms in definition
 Capital budgeting
Capital budget
Capital
Cash
Cost of capital
Firm
Shareholders
 
 Related Terms
 
Average cost of capital
Capital
Capital account
Capital adequacy
Capital allocation decision
Capital appreciation
Capital asset
Capital asset pricing model
Capital budget
Capital budgeting
Capital cost allowance
Capital expenditure
Capital flight
Capital gain
Capital gains yield
Capital impairment rule
Capital lease
Capital loss
Capital market
Capital market efficiency
Capital market imperfections view
Capital market line
Capital rationing
Capital stock
Capital structure
Capital surplus
Change in net working capital
Close out
Complete capital market
Cost of capital
Cost of limited partner capital
Debt capital
Debt to capital ratio
Dedicated capital
Down and out
Down and out option
Efficient capital market
Equity capital
Exchange rate risk capital budgeting
Financial or capital lease
First in first out fifo
Hard capital rationing
Human capital
Invested capital
Issued share capital
Knock in and knock out options.
Last in first out lifo
Legal capital
Lifo last in first out
Lock out
Marginal cost of capital
Marginal cost of capital schedule
Net working capital
Net working capital recapture
Netting out
Nondiversifiability of human capital
Opportunity cost of capital
Optimal capital structure
Other capital
Out
Out of the money option
Outstanding share capital
Pecking order view of capital structure
Perfect capital market
Perfect market view of capital structure
Personal tax view of capital structure
Pie model of capital structure
Planned capital expenditure program
Priced out
Pro forma capital structure analysis
Real capital
Real options capital budgeting
Regulatory capital
Risk capital budgeting
Soft capital rationing
Sophisticated approaches to capital budgeting
Static theory of capital structure
Stop out price
Take out
Target capital structure
Taxable capital gain
Total capital
Uniform net capital rule
Up and out
Venture capital
Weighted average cost of capital
Work out
Working capital
Working capital management
Working capital ratio

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