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Updated in [July 27th, 2023]
This video provides an introduction to capital budgeting and the various important concepts and considerations. It also covers the time value of money and provides examples of calculating present value (PV) and future value (FV) of single cash flows as well as annuities (streams of equal cash flows with an equal time interval between each payment). Present value and future value calculations are demonstrated using both PV and FV tables as well as various financial calculators, such as the Texas Instruments BA II Plus, the Hewlett Packard HP 10b and HP 10c. The video also discusses the benefits and drawbacks of the most popular capital budgeting decision models, including Net Present Value (NPV) for even and uneven cash flow streams, Net Present Value Profitability Index, Internal Rate of Return (IRR) for even and uneven cash flow streams, Payback Period for even and uneven cash flow streams, and Simple Rate of Return. This video provides basic, step-by-step coverage that is comparable to in-class introductory capital budgeting lectures in managerial or cost accounting, and can help students understand capital budgeting and how to do the calculations using tables and/or a financial calculator.