Risk_in_Capital_Budgeting_Final_with_ThankYou.pptx

Risk in capital budgeting

1. Risk in Capital Budgeting Managing Uncertainty in Big Investments

2. What is Capital Budgeting? Deciding on long-term investments for company growth. Focus on future cash flows, profitability, and value creation.

3. Why Risk Happens in Capital Budgeting? Uncertainty about future revenues and costs. Influence of economy, markets, and unexpected events.

4. Major Types of Risks Business Risk: Internal operational problems. Financial Risk: Funding challenges and loan burdens. Economic Risk: Inflation, recession, policy shifts.

5. Techniques to Manage Risk Sensitivity Analysis: Study impact of variable changes. Scenario Analysis: Plan for multiple possible outcomes. Higher Discount Rates: Adjust returns for risk.

6. Thank You!