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CREATING VALUE: THE APPROPRIATE USE OF CAPITAL BUDGETING

Dr. Michael C. Ehrhardt (Associate Professor of Finance, University of Tennessee, Finance Department, SMC‐424, Knoxville, Tn 37996–0540)
Dr. James M. Reeve (Professor of Accounting, University of Tennessee, Accounting Department, SMC‐622, Knoxville, Tn 37996–0540.)

Managerial Finance

ISSN: 0307-4358

Publication date: 1 May 1991

Abstract

Traditional approaches to capital budgeting may be inadequate in today's complex business environment. This paper identifies problems with a narrow approach to capital budgeting and suggests several improvements. In particular, an example illustrates an option‐based approach to valuing managerial flexibility.

Citation

Ehrhardt, M.C. and Reeve, J.M. (1991), "CREATING VALUE: THE APPROPRIATE USE OF CAPITAL BUDGETING", Managerial Finance, Vol. 17 No. 5, pp. 3-13. https://doi.org/10.1108/eb013679

Publisher

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MCB UP Ltd

Copyright © 1991, MCB UP Limited