1. Basics of Capital Budgeting  Capital Budgeting -  Methods/Decisions Rules for Evaluating Capital Projects 

2. Example Projects  Note: No cashflows are expected after year five for either project, and the marginal cost of capital is 10% for each project.

3. Payback Period FPayback Period -  What is the Payback Period for Oklahoma Oil Outpost?  What is the Payback Period for Western Windmill Warehouse? FInterpreting the Payback Period  Decision Rules: »Mutually Exclusive Projects - »Independent Projects -  Deficiencies:

4. Discounted Payback Period FDiscounted Payback Period -  What is the Discounted Payback Period for Oklahoma Oil Outpost?  What is the Discounted Payback Period for Western Windmill Warehouse? FInterpreting the Discounted Payback Period  Decision Rules: »Mutually Exclusive Projects - »Independent Projects -  Deficiencies:

5. Net Present Value (NPV) FNet Present Value -  What is the Net Present Value for Oklahoma Oil Outpost?  What is the Net Present Value for Western Windmill Warehouse? FInterpreting the Net Present Value  Decision Rules: »Mutually Exclusive Projects - »Independent Projects -  Deficiencies:

6. Internal Rate of Return (IRR) FInternal Rate of Return -  What is the Internal Rate of Return for Oklahoma Oil Outpost?  What is the Internal Rate of Return for Western Windmill Warehouse? FInterpreting the Internal Rate of Return (IRR)  Decision Rules: »Mutually Exclusive Projects - »Independent Projects -  Deficiencies:

7. Crossover Rate  Crossover Rate -  What is the Crossover rate between Oklahoma Oil Outpost (OOO) and Western Windmill Warehouse (WWW)?

8. Modified Internal Rate of Return (MIRR) FModified Internal Rate of Return (MIRR) -  What is the MIRR for Oklahoma Oil Outpost?  What is the MIRR for Western Windmill Warehouse? FInterpreting the Modified Internal Rate of Return (MIRR)  Decision Rules: »Mutually Exclusive Projects - »Independent Projects -  Deficiencies:

9. Profitability Index (PI) FProfitability Index -  What is the Profitability Index for Oklahoma Oil Outpost?  What is the Profitability Index for Western Windmill Warehouse? FInterpreting the Profitability Index (PI)  Decision Rules: »Mutually Exclusive Projects - »Independent Projects -  Deficiencies: