In capital budgeting, the financial manager identifies investment opportunities that are worth more to the company than they cost to acquire. For the company you selected for your business plan: What process do you use to evaluate capital investment decisions? What capital budgeting methods do you use (e.g. payback period, IRR, NPV)? Do you think these are appropriate methods for your company? Use the Harvard Business Case, “HBS Hansson Private Label, Inc.” as the basis for answering the following questions: Estimate the project’s NPV Do you recommend Tucker Hansson to proceed with the investment? Capital property and investment considerations are not only dependent on the financial impact it may have on the organization. There are also non-economic factors to consider, including efficiency and patient outcomes that can influence the financial risk or impact that an investment decision may have. A huge cost for any healthcare facility is new equipment purchases and upgrades of existing equipment. Many organizations plan to upgrade equipment or replace it when they don't believe volumes are as high as they should be, or when they feel as though they don't have enough units of a given type to continue to function smoothly. References Carroll, J. J., & Newbould, G. D. (1986). NPV vs. IRR: with capital budgeting, which do you choose?. Healthcare financial management : journal of the Healthcare Financial Management Association, 40(11), 62–68. Jekunen A. (2014). Decision-making in product portfolios of pharmaceutical research and development--managing streams of innovation in highly regulated markets. Drug design, development and therapy, 8, 2009– 2016. https://doi.org/10.2147/DDDT.S68579 Mays, L. (2015). Why capital planning matters to healthcare organizations. Accruent. Retrieved from http://www.accruent.com/blog/entry/whycapital-planning-matters-to-healthcare-organizations McKay, D. A., & Peters, D. A. (2013). You want me to write a business plan? Capital budgeting fundamentals for the plastic surgeon. The Canadian journal of plastic surgery = Journal canadien de chirurgie plastique, 21(2), 107– 108. https://doi.org/10.1177/229255031302100211
