Master Capital Budgeting with Real-World Applications

Learn advanced financial decision-making through practical case studies and proven methodologies that Australian finance professionals actually use in their daily work.

Explore Learning Programs

Compare Investment Evaluation Methods

Understanding different approaches helps you choose the right analysis technique for each business scenario you encounter.

Net Present Value (NPV)

Most comprehensive method that accounts for time value of money. Perfect for comparing projects with different cash flow patterns and timeframes.

Best for: Long-term strategic investments, equipment purchases, facility expansions

Internal Rate of Return (IRR)

Shows the discount rate where project breaks even. Helpful when comparing investment efficiency across different scales.

Best for: Portfolio comparisons, investor presentations, benchmark analysis

Payback Period

Simple calculation showing how quickly initial investment recovers. Useful for risk assessment and liquidity planning.

Best for: Cash flow constrained situations, high-uncertainty environments, quick screening

Your Learning Journey Through 2025

Foundation Phase (Months 1-2)

Start with fundamental concepts including time value of money, discount rates, and basic cash flow analysis. You'll work through real Australian company examples to understand how these principles apply in practice.

Application Phase (Months 3-4)

Dive into complex scenarios involving multiple projects, budget constraints, and risk analysis. Learn sensitivity testing and scenario planning that financial managers use daily.

Advanced Techniques (Months 5-6)

Master sophisticated methods like real options valuation, capital rationing, and international project evaluation. These skills set you apart in competitive financial markets.

Portfolio Integration (Months 7-8)

Learn to evaluate entire investment portfolios, understand interdependencies between projects, and make strategic recommendations that align with business objectives.

Common Questions About Capital Budgeting

How do I handle projects with uneven cash flows?

Uneven cash flows are actually more common than steady ones in real business. NPV handles this naturally by discounting each period individually. The key is accurately forecasting each year's cash flow and choosing appropriate discount rates that reflect changing risk levels over time.

What discount rate should I use for different project types?

Discount rates should reflect project risk levels. Use your company's weighted average cost of capital (WACC) as baseline, then adjust upward for riskier projects or downward for safer ones. Infrastructure projects might use WACC + 1%, while new product launches might use WACC + 4%.

How do I compare projects of different sizes and durations?

This is where profitability index (PI) becomes valuable alongside NPV. Calculate PI by dividing NPV by initial investment. For duration differences, consider using equivalent annual annuity (EAA) method to convert projects to comparable annual terms.

What about inflation and currency effects?

Always maintain consistency between nominal and real terms. If cash flows include inflation estimates, use nominal discount rates. For international projects, consider currency hedging costs and political risk premiums in your discount rate adjustments.

Learn from Industry Practitioners

Ridley Brennan

Senior Financial Analyst & Course Developer

With fifteen years analyzing capital investments across mining, manufacturing, and services sectors, Ridley brings real-world complexity into every lesson. His practical approach helps students understand not just the formulas, but when and why to apply different techniques.

Before joining selidronavexiq, Ridley managed capital allocation for three ASX-listed companies, evaluating over billion in investment proposals. He holds CFA designation and regularly consults with finance teams across Australia.

Meet Our Full Team