- CFA Exams
- 2021 Level I
- Study Session 10. Corporate Finance (1)
- Reading 32. Capital Budgeting
- Subject 6. Popularity and Usage of the Capital Budgeting Method
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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® 2021 Level I Curriculum, 2021, Volume 4, Reading 32
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| User | Comment |
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| fsammari | this stuff is well- summarized |
| merc5559 | I agree. I was able to fly through this section. |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
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