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Consultative Selling, 8th Edition by Mack HANAN

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Appendix AHOW CUSTOMER MANAGERSBUDGET CAPITAL EXPENDITURES

When a capital expenditure is proposed, the project must be evaluated and the economic consequences of the commitment of funds determined before it is referred to a budget committee for review or to management for approval. How are the economic consequences described best? This is done in two steps:

First, set up the project in a standard economic model that can be used for all projects, no matter how dissimilar to one another they may be.

Benefits – Costs = Cash Flow

To describe the formula in accounting terminology:

image

Thus, if the model were stated in a conventional accounting form, it ...

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