Capital Budgeting Excel Model

Should I pursue the project? Analyse your Investment Decision with this 4 tab Excel Template.

by Jatin Goel
Fundamental AnalystFollow 18

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Description
This is a 4 tab Excel model that will help you evaluate a project and take a decision whether to pursue the project or not and which project should pursue between the two.

How do you use the Model?

1) Intro tab - you have to select how you are going to fund the project out of the 3 options presented: Equity, Debt and Equity+Debt. After clicking one option you will be re-directed to that specific page.

2) Equity Tab - This is were you will have to fill the inputs provided in Blue. i.e Project cost, Life of the project, Salvage Value, Year, Expected Return (Implicit Cost), Annual Cash Saving (In case of buying new equipment and discarded the old one i.e repair and maintenance expense of old one ), expected annual cash expense (In case of buying new equipment and discarded the old one i.e repair and maintenance expense of new one )and Expected future cash flows etc... The Model will then calculate present value of all the future cash flows and will calculate 4 Major decision indicators.
1. NPV (Net Present Value)
2. IRR (Internal Rate of Return)
3. Return on investment (ROI)
4. Profitability Index (PI)

3) Bank Loan Tab - This is were you will have to fill the inputs provided in blue i.e Project cost, Year, Salvage Value, Interest Rate and expected future cash flow etc.. The Model will then calculate present value of all the future cash flows and will calculate 4 Major decision indicators.
1. NPV (Net Present Value)
2. IRR (Internal Rate of Return)
3. Return on investment (ROI)
4. Profitability Index (PI)

4) Equity+Loan - This is were you will have to fill the inputs provided in blue. i.e Project cost, Own Money (Equity), Life of the project, Salvage Value, Interest Rate, Equity Cost and expected future cash flow etc..
The Model will then calculate present value of all the future cash flows and will calculate 4 Major decision indicators.
1. NPV (Net Present Value)
2. IRR (Internal Rate of Return)
3. Return on investment (ROI)
4. Profitability Index (PI)

This model is prepared to consider all of the major and minor aspects ( i.e Salvage Value, Tax Shield) that can effect the cash flow of an the project and will help you to select the one that is profitable for you.

You must have basic Excel knowledge to use this capital budgeting excel model.
-Jatin

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1 Excel Model