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Richard Melancon
Integrity-based Leadership will Take Your Company to the Top
Integrity-based Leadership will Take Your Company to the Top
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Richard Melancon commented on a post on Blogger.
Sorry. Didn't get to finish my thoughts.  Thank you for the article.  It is well-written and certainly answers specific questions about calculating measurement points related to a capital budget.  

You have successfully exposed the main reason why a capital project budget is difficult to create. Often, the company has not defined the critical factors (IRR, cost of capital, etc.), staff may not be comfortable with the math, and Managers are not willing to be accountable to estimate future cash flows.
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Richard Melancon commented on a post on Blogger.
It's a bit harsh to say that capital budgeting is an attempt to determine the future.  How about if we say that capital budgeting is a rational attempt to estimate the monetary value of a capital project.  

Like all tools, it is not the only measure of full value, project worth, or overall improvement a capital budget does not address subjective benefits, such as lower pollution, increased jobs, higher permanent productivity, etc.
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