Capital Budgeting भनेको एक process हो जुन long-term investment मा evaluate र decide गर्न use हुन्छ।Capital budgeting भनेको investor हरूले सम्भावित लगानी project को मूल्य निर्धारण गर्ने प्रक्रिया हो। Company हरूले प्रमुख project हरू र investment हरूको मूल्याङ्कन गर्नका लागि capital budgeting प्रयोग गर्छन्। Capital Budgeting new resources हरुमा investment गर्दा business का लागि financial implication (कुनै निर्णय, क्रिया, वा घटनाको financial impact प्रभाव) बुझ्ने एउटा way हो ।
Main objective of capital budgeting
- Profitability को Assessment (मूल्यांकन) :यसको माध्यम बाट company ले investment हरु जस्तै: new plant, machinery हरु बाट कस्तो profit कमाउँन help गर्छ भन्नी decide गर्छ।
- Risk को Evaluation: Different project मा के कस्तो risk involved छ भन्ने analysis गर्छ र यसको माध्यमबाट risk लाई minimize गर्ने गर्छ ।
- Resources को Efficient Allocation: Capital Budgeting को माध्यम बाट limited Financial resources लाई सब भन्दा effective way मा use गर्ने decision दिन्छ।
- Long term Growth and value maximization: Company को long-term growth लाई ensure गर्ने अनि Shareholder को value maximize गर्नु नै capital budgeting को Objective हो।
Application of capital budgeting
- Expansion projects: Capital Budgeting project को Evaluation र planning गर्न use हुन्छ। यसले Business मा growth गर्ने help गर्छ अथवा आफ्नो resources हरु कहाँ र कसरी लगानी गर्ने भन्ने बारे सूचित निर्णयहरू लिन help गर्छ।
- Budget Allocation and capital Rationing :Capital Budgeting ले Budget Allocation र capital rationing मा महत्वपूर्ण भूमिका खेल्छ, जसले गर्दा Business मा limited Financial resources लाई विभिन्न लगानी अवसरहरूमा प्रभावकारी रूपमा उपयोग गर्ने help गर्छ ।
- Evaluating Alternative project: Company का लागि सबैभन्दा धेरै मूल्य दिने project को निर्धारण गर्न विभिन्न लगानी विकल्पहरुको तुलना गर्दछ।
- New product development: New product development मा capital budgeting ले company लाई लगानीका अवसरहरू evaluate, select & प्राथमिकता दिन help गर्छ, जसले limited financial resources हरुलाई project जुनमा बढि मूल्य थप्न सम्भावना छ त्यसैमा effectively allocated गर्ने help गर्छ।
Importance of capital budgeting
- यसले Risk management गर्न help गर्छ।
- Capital budgeting ले Financial planning सुधार गर्न long term investment हरुको evaluate गर्न help गर्छ।
- यसले जुन Investment मा best return पाउँछ त्यसमा बढी Focus गर्छ ,risk पनि manage गर्छ ।
- Shareholder’s हरुको value पनि maximize गर्न help गर्छ ।
Company को सम्भावित investment र project हरूको evaluate अनि compare गर्न capital Budgeting को technique / method हरु को प्रयोग गरिन्छ केही technique / method जस्तै:
1.1NPV (Net Present value)
Net present value भनेको cash inflow (company मा नगद प्राप्त हुनु) र cash outflow(cash company भन्दा बाहिर जानु )को वर्तमान मूल्य र बिचको अन्तर हो ।
NPV= PV of CF- initial investment
company मा दुई वटा project हुन्छ independent project र mutually exclusive Project.
Independent project भयो भने positive NPV लाई मात्रै accept गर्छ, negative NPV लाई reject गर्छ।
Mutually exclusive project मा चाहि positive with high NPV मात्रै accept गर्छ ।
1.2Internal Rate of Return
IRR भनेको project अथवा investment को profitability evaluate गर्न financial metric हो
-Fake dis. Factor = initial investment/ average cf
-IRR= LR+((Value of LR-RV/)(Value LR-Value HR)(HR-LR))
Independent project मा Cost of capital भन्दा IRR भयो भने project Accept हुन्छ ।
Mutually exclusive project मा जुन project को IRR high हुन्छ त्यहि project accept गरिन्छ किनभने high IRR ले shareholder को धेरै wealth contribute गर्छ।
1.3Pay back period
कुनै investment ले आफ्नो सुरुको लागत बरावरको cash flow generate गर्न कति समय लाग्छ भन्ने कुरा जनाउँछ।
PBP= Initial cost/Annual cashflow =I/CFa
Independent project ,Recovery period भन्दा payback period less are project accept हुन्छ ।
Mutually exclusive project Shorter payback period भएको project Select हुन्छ।
1.4Discounted PBP
कुनै investment ले आफ्नो initial cost फिर्ता गर्न लागेको समय हो, जसले पैसको समय मूल्यलाई विचारमा राख्छ।
Dis. PBP= min.yr+(Amount to recover/max. yr PV of cf)
यदि std dis. PBP> cal. Dis.PBP- accept
यदि std dis. PBP< cal. Dis.PBP-reject
यदि project mutually exclusive भए short dis. PBP project better हुन्छ ।
1.5Modified internal rate of return
यो एक Financial metric हो जसले investment or project को profitability evaluate गर्न use हुन्छ ।
Initial investment= FVof cfs/(1+MIRR)*n
यदि MIRR> WACC- accept
यदि MIRR<WACC- reject
यदि mutually exclusive भए Higher MIRR project acceptable हुन्छ ।
1.6Profitability index(PI)
एक Financial metric हो जुन investment वा project को attractiveness evaluate गर्ने help use गरिन्छ ।
PI= Pv of cf/ initial investment
यदि PI>1 project accept हुन्छ,
यदि PI<1 project reject हुन्छ ।
यदि project mutually exclusive भए higher PI project better हुन्छ ।
1.7Accounting rate of return
यसले Different investment र project को profitability compare गर्ने एउटा simple way provide गर्छ।
यसले जुन investment र project accounting information मा based छ हो त्यसैको profitability evaluate गर्न use गर्छ।
ARR = (Average net income /Average investment)*100
यदि std ARR> cal.ARR , project accept हुन्छ,
यदि std ARR<cal.ARR, project reject हुन्छ ।
Example;
यसमा दुई वटा project suppose गरिएको छ (x and y) project x मा equal cash flow लिइएको छ भने project y मा unequal cash flow लिइएको छ।
Suppose ,
| Cash flow | ||
| Year | Project x | Project y |
| 0 | (10000) | (10000) |
| 1 | 3500 | 6500 |
| 2 | 3500 | 3000 |
| 3 | 3500 | 3000 |
| 4 | 3500 | 1500 |
Cost of capital let be 10%
- Pay back period
Project X,
Project X मा Rs10000 inital investment लिइएको छ जसमा cash flow 4 yr को Rs
3,500 रहेको छ यदि cash equal छ भने
PBP= Initial investment/ Average cash flow=10000/3500=2.87yr PBP आएको छ।
Project y ,
Determine cumulative cf
| yr | cf | cum cf |
| 1 | 6500 | 6500 |
| 2 | 3000 | 9500 |
| 3 | 3000 | 12500 |
| 4 | 1500 | 14000 |
Project Y को हेर्नु पर्दा यसमा पनि investment Rs 10000 रहेको छ तर cash flow भने
unequal छ जस्तै 6500, 9500, 12500, 14000. Investment Rs 10000 भएकाले यो year
2 र year 3 को बिचमा पर्छ जसबाट
PBP= Minimum year +(Amount to recover/maximum year’s CF)
= 2+(500+3000)
=2.17 yr आउँछ।
Compare standard PBP and calculate PBP
यदि std PBP> cal.PBP – accept
यदि std PBP< cal. PBP- reject
यदि project mutually exclusive भए short PBP project better हुन्छ
- Discounted PBP
-Step 1: determine cum PV of cf
project x
| Yr | cf | 10%PVIF | PV of cf | Cum. PV of cf |
| 1 | 3500 | 0.9091 | 3182 | 3182 |
| 2 | 3500 | 0.8264 | 2892 | 6074 |
| 3 | 3500 | 0.7513 | 2630 | 8704 |
| 4 | 3500 | 0.6830 | 2392 | 11095 |
-Step 2: determine discounted PBP by using
Dis. PBP= min.yr+(Amount to recover/max. yr PV of cf)= 3+(1296/2391)=3.54 yr
-Step 3: Decision Rule
यदि std dis. PBP> cal. Dis.PBP- accept
यदि std dis. PBP< cal. Dis.PBP-reject
यदि project mutually exclusive भए short dis. PBP project better हुन्छ ।
project y
-Step 1: determine cum PV of cf
| Yr | Cf | 10% of CF | PVIF of CF | Cum PV of cf |
| 1 | 6500 | 0.9091 | 5909 | 5909 |
| 2 | 3000 | 0.8264 | 2479.2 | 8388 |
| 3 | 3000 | 0.7513 | 2254 | 10642 |
| 4 | 1500 | 0.6830 | 1024 | 11666 |
-Step 2: determine discounted PBP by using
Dis.PBP= min yr+( amount to recover+max. yr PV of cf)=2+(1612/2254)=2.71 yr
-Step 3: Decision Rule
यदि std dis. PBP> cal. Dis.PBP- accept
यदि std dis. PBP< cal. Dis.PBP-reject
यदि project mutually exclusive भए short dis. PBP project better हुन्छ ।
- Net present value
NPV= PV of CF- initial investment
Positive NPV भए project accept हुन्छ,
Negative NPV भए project reject हुन्छ ।
project x
| Yr | Cf | 10% DF | PV of cf |
| 1-4 | 3500 | 3.1699 | 11095 |
| Total PV of cf | 11095 | ||
| Less initial investment | (10000) | ||
| NPV | +1095 | ||
Project x मा हेर्नु पर्दा investment Rs 10000 रहेको छ जसमा cash flow 3500
cost of capital 10% लिइएको छ भने total PV of CF Rs 11095 आएको हो।
जसबाट NPV = PV of CF-initial investment
=11095-10000
= 1095
NPV positive आयो जसका कारण project accept हुन्छ। यदि NPV negative भएको भए
project reject हुन्थ्यो ।
project y
| Yr | cf | 10% DF | PV of CF |
| 1 | 6500 | 0.9091 | 5909 |
| 2 | 3000 | 0.8264 | 2479 |
| 3 | 3000 | 0.7513 | 2254 |
| 4 | 1500 | 0.6830 | 1025 |
| Total PV of cf | 11667 | ||
| Less initial investment | (10000) | ||
| NPV | +1667 | ||
Project Y मा cash flow unequal छ यसमा cost of capital लाई 10% supposeगरीएको छ जसबाट Total PV of CF भने RS 11667 आएको छ यसबाट NPV निकाल्नाको लागि NPV को Formula use गर्नु पर्छ जस्तैः
NPV = PV of CF – Initial investment
=11667-10000
= 1667
- Profitability index(PI)
PI= Pv of cf/ initial investment
यदि PI>1 project accept हुन्छ,
यदि PI<1 project reject हुन्छ ।
यदि project mutually exclusive भए higher PI project better हुन्छ ।
Project x,
PI= 11095/10000=1.11
For proj y;
PI= 11667/10000=1.6667
यसमा चाहि investment र total pv of cf use हुन्छ। total PV CF र investment को ratio नै profitability index हो जसको कारण Project ले कति profit gain गरेको छ भन्ने
थाहा हुन्छ ।
Mutually exclusive भए project y select गर्ने ।
- Accounting rate of return (ARR)
ARR=( Average net income/ Average investment)*100%
यदि std ARR > cal. ARR – reject
यदि std ARR < cal. ARR- accept
Calculate of Net income
Cash flow after tax( CFAT)= Net income after tax+annual dep
Annual depreciation= (cost- scrap value)/ life in yr= (1000-0)/4=2500
Average investment= initial investment/2=10000/2=5000
Cal.of Average NI
project x
| Yr | Cf | Depn. | NI |
| 1-4 | 3500 | 2500 | 1000 |
Average NI= 1000
project y
| Yr | Cf | Depn. | NI |
| 1 | 6500 | 2500 | 4000 |
| 2 | 3000 | 2500 | 500 |
| 3 | 3000 | 2500 | 500 |
| 4 | 1500 | 2500 | (1000) |
| 4000 |
Average NI=4000/4= 1000
ARR=1000/5000=20%
- Internal rate of return (IRR)
project x
-Step 1: determine fake discount factor by using
Fake dis. Factor = initial investment/ average cf= 10000/3500=2.8571
Step 2: reterring the PVIFA table in 4 yr the discount factor lies between 14% and 15%
Then try at 14% and 15%
| Yr | cf | 14% DF | PV | 15% DF | PV |
| 1-4 | 3500 | 2.9137 | 10198 | 2.8550 | 9993 |
-Step 3: follow interpolation
IRR= LR+((Value of LR-RV/)(Value LR-Value HR)(HR-LR))
= 14+(198/205)(1%)=14.97%
project y
-Step 1: determine fake discount factor by using
Fake dis. Factor = initial investment/ average cf= 10000/3500=2.857%
-Step 2: reterring the PVIFA table in 4 yr the discount factor lies between 14% and 15%
| Yr | cf | 14%DF | PV | 15%DF | PV | 19%DF | PV | 20%DF | PV |
| 1 | 6500 | 0.8772 | 5702 | 0.8696 | 5652 | 0.8403 | 5462 | 0.8333 | 5416 |
| 2 | 3000 | 0.7695 | 2309 | 0.7561 | 2268 | 0.7062 | 2119 | 0.6944 | 2083 |
| 3 | 3000 | 0.6750 | 2025 | 0.6575 | 1973 | 0.5934 | 1780 | 0.5787 | 1736 |
| 4 | 1500 | 0.5921 | 888 | 0.5718 | 858 | 0.4987 | 748 | 0.4823 | 723 |
| 10924 | 10751 | 10109 | 9958 |
-Step 3: interpolation
IRR= LR+(Value LR-RV)/(Value of LR- Value of HR)(HR-LR))
= 19+(109/151)= 19.72
IRR मा पहिले Fake discount Factor निकालिन्छ र त्यो आएको value Financial table
को PVIFA table मा हेरिन्छ र कुन rate मा पर्छ थाहा पाइन्छ । equal cash flow मा चाहि
जून year last मा छ त्यही year को PVIFA हेर्ने जस्तै 4 वटा year छ भने 4 year कै PVIFA
value हेर्ने। cost of capital को rate चाहि जहाँ investment को value बिचमा आउँछ त्यही
rate लिने।
Decision rule
यदि IRR> WACC- accept
यदि IRR<WACC- reject
यदि mutually exclusive भए Higher IRR project acceptable गर्छ ।
Note: यदी हामीले लिइएको rate मा PV Lower value र higher value को आसपासमा
आएन भने फेरि अर्को rate लिन मिल्छ।
- Modified internal rate of return(MIRR)
-Step 1: determine FV of cf
project x,
| Yr | cf | 10% FVIFA | FV |
| 1-4 | 3500 | 4.6410 | 16244 |
-Step 2: determine MIRR by using
Initial investment= FVof cfs/(1+MIRR)*n
1000=16244/(1+MIRR)*4
(1+MIRR)*4=1.6244
1+MIRR=1.1289
MIRR=12.89%
project y
| Yr | Cf | 10% DF | FV |
| 1 | 6500 | 1.3310 | 8652.5 |
| 2 | 3000 | 1.2100 | 3630 |
| 3 | 3000 | 1.1000 | 3300 |
| 4 | 1500 | 1.0 | 1500 |
| 17082 |
Formula:
Initial investment= FV of cfs/(1+MIRR)*n
10000= 17082/(1+MIRR)*4
(1+MIRR)*4=1.7082
1+MIRR=1.1432
MIRR=14.32%
Decision rule
यदि MIRR> WACC- accept
यदि MIRR<WACC- reject
MIRR मा भने future value को Financial table हेर्न पर्छ।
यदि mutually exclusive भए Higher MIRR project acceptable हुन्छ ।
Note:यो data हरु सब assume गरेको हो।यसमै आधारित नमुना होला।
:10%FVIFA,10%DF,14%DF,19%DF र 20%DF हरुको सबै data financial table बाट लिइएको हो।
Conclusion
Capital Budgeting भनेको एक process हो जुन long-term investment मा evaluate र decide गर्न use हुन्छ।Capital Budgeting new resources हरुमा investment गर्दा business का लागि financial implication बुझ्ने एउटा way हो।
यसले विभिन्न project हरूको analyze गर्न NPV, IRR, ARR, MIRR, Pay Back Period र Discounted Pay Back Period जस्ता method हरूको प्रयोग गरिन्छ जसले स्रोतहरूको optimal allocation ensure गर्न र shareholder को मूल्य maximize गर्न help गर्दछ। यसले businesses हरूलाई long term वृद्धि र profitability को लागि informed investment निर्णय गर्न help गर्छ।
