This capital investment model template will help you calculate key valuation metrics of a capital investment including the cash flows, net present value (NPV), internal rate of return (IRR), and payback period.
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What is a Capital Investment Model
Most companies make long-term investments which require a large amount of capital invested in the initial years, mostly in fixed assets such as property, machinery, or equipment. Due to the significant amount of cash outflows required, companies would always perform a capital investment analysis to evaluate the profitability of the investment and determine whether it is worthy. This is especially important when a business is presented with multiple potential opportunities and need to make a investment decision based on the long-run returns they can get.
To assess the profitability of a capital investment, companies can build a capital investment model in Excel to determine the cash flows and potential returns.
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Below is a break down of subject weightings in the FMVA® financial analyst program. As you can see there is a heavy focus on financial modeling, finance, Excel, business valuation, budgeting/forecasting, PowerPoint presentations, accounting and business strategy.
A well rounded financial analyst possesses all of the above skills!
Additional Questions & Answers
CFI is the global institution behind the financial modeling and valuation analyst FMVA® Designation. CFI is on a mission to enable anyone to be a great financial analyst and have a great career path. In order to help you advance your career, CFI has compiled many resources to assist you along the path.
In order to become a great financial analyst, here are some more questions and answers for you to discover:
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