Capital Budgeting

1. Payback method does not consider the present value of cash flows. Under this method, an investment
project is accepted or rejected on the basis of payback period. Payback period means the period of time
that a project requires to recover the money invested in it. The payback period of a project is expressed in
years and is computed using the following formula:
Formula of payback period:

According to this method, the project that promises a quick recovery of initial investment is considered
desirable. If the payback period of a project computed by the above formula is shorter than or equal to the
managements maximum desired payback period, the project is accepted otherwise it is rejected.

2. Accounting rates of return: Under this method, the assets expected accounting rate of return (ARR)
is computed by dividing the expected incremental net operating income by the initial investment and then
compared to the managements desired rate of return to accept or reject a proposal. If the assets
expected accounting rate of return is greater than or equal to the managements desired rate of return,
the proposal is accepted. Otherwise, it is rejected.
3. Net present value method (also known as discounted cash flow method) is a popular capital
budgeting technique that takes into account the time value of money. It uses net present value of the
investment project as the base to accept or reject a proposed investment in projects like purchase of new
equipment, purchase of inventory, expansion or addition of existing plant assets and the installation of
new plants etc.
Net present value (NPV):
Net present value is the difference between the present value of cash inflows and the present value of
cash outflows that occur as a result of undertaking an investment project. It may be positive, zero or
negative.
The summary of the concept explained so far is given below:
1. Present value of cash inflows > Present value of cash outflows
POSITIVE NPV
Project is acceptable

2. Present value of cash inflows = Present value of cash outflows
ZERO NPV
Project is acceptable

3. Present value of cash inflows < Present value of cash outflows
NEGATIVE NPV
Project is rejected

REPORT:

http://www.summitreports.com/nytd/reports/pakistan/seventeen.html
file:///C:/Users/Siddiqui/Desktop/annual_report2009.pdf
http://www.scribd.com/doc/24747448/Unilever-Report
http://www.unilever.pk/aboutus/ourhistory/
http://www.findpk.com/yp/OPs/html/business_success_stories_in_pa.html
http://www.slideshare.net/faizajavaid16/mis-in-unilever
http://www.sybase.com/detail?id=1018908
http://projectsinmba.blogspot.com/2011/08/marketing-research-project-on-unilever.html
for Walmart report:
http://www.slideshare.net/lpmontesa/walmart-analysis
http://www.slideshare.net/khushbuchauhan351/walmart-2-31891638?related=1
http://www.grin.com/en/e-book/134367/the-wal-mart-success-story
http://www.slideshare.net/KalaiVaniParamasivan/abm-success-story-of-walmart
http://allman.rhon.itam.mx/~oromero/Wal_Mart_CaseStudy.pdf
http://corporate.walmart.com/our-story/history/history-timeline
http://corporate.walmart.com/our-story/history/10-rules-for-building-a-business
http://corporate.walmart.com/our-story/history/sam-walton
http://www.wal-martchina.com/english/walmart/culture.htm
http://foundation.walmart.com/our-focus/special-interests/
http://www.slideshare.net/osvadillo/walmart-sm-8335984
http://diversitymbamagazine.com/docs/Walmart-2013-D+I-Impact-Report.pdf
http://www.authorstream.com/Presentation/mukkubudhori-1568090-walmart/
http://cdn.corporate.walmart.com/e7/56/3ed4bbc34b56b7462ed4a6e38642/analyst-meeting-2013-
presentation-walmart-us-october-15-2013.pdf
http://www.unc.edu/~jenhoppe/Portfolio/Wal-Mart%20Stores,%20Inc.pdf
red for History and sub- divisions of walmart