Why should I choose AnalystNotes?

Simply put: AnalystNotes offers the best value and the best product available to help you pass your exams.

Find out more
Subject 6. Popularity and Usage of the Capital Budgeting Method PDF Download
The usefulness of various capital budgeting methods depends on their specific applications. Although financial textbooks often recommend the use of NPV and IRR methods, other methods are also heavily used by corporations.

Capital budgeting is also relevant to external analysts in estimating the value of stock prices. Theoretically, if a company invests in positive NPV projects, the wealth of its shareholders should increase.

The integrity of a firm's capital budgeting processes can also be used to show how the management pursues its goal of shareholder wealth maximization.

Learning Outcome Statements

f. describe expected relations among an investment's NPV, company value, and share price.

CFA® Level I Curriculum, 2020, Volume 4, Reading 32

User Contributed Comments 2

User Comment
fsammari this stuff is well- summarized
merc5559 I agree. I was able to fly through this section.
You need to log in first to add your comment.
Thanks again for your wonderful site ... it definitely made the difference.
Craig Baugh

Craig Baugh

My Own Flashcard

No flashcard found. Add a private flashcard for the subject.

Add

Actions