Discussion 4: Capital Budgeting (Ch.9): This assignment is intended to help you learn to explain the inputs to decision making with the net present value method of capital budgeting.

June 17, 2023June 17, 2023 Discipline: Finance

Overview:


An article (provided) that appeared in The Wall Street Journal mentions the magnitude of impairments that have arisen as a result of the Covid-19 pandemic (Maurer, 2020Links to an external site.). As pointed out in the article, the decision to take an impairment charge is an acknowledgement that the future is not expected to play out as it once was expected to.

Long-lived capital projects may be particularly vulnerable to failing to meet expectations. Much like what you have encountered in the course, these projects are evaluated with present value methods.

Action Items:

1. By the due date indicated, create an initial post that answers the following:

–What is it that a company like Chevron overlooked in making its decision to invest in Venezuela?

–If you were responsible for determining the net present value of Chevron’s Venezuela operations, how would you modify the inputs to your calculation if you felt there were greater than anticipated risks?

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