Creating a Capital Budgeting Analysis Model in Excel--From Basic to Advanced Topics

Abstract

We present an exercise that guides students through the creation of a detailed capital budgeting spreadsheet model. The activity gives students the opportunity to engage in an experiential learning exercise that provides an additional perspective on key finance concepts and calculations. the outputs from the exercise are useful tools for demonstrating the level of students' spreadsheet modeling skills. The exercise includes basic and advanced modules, which makes it applicable across a wide range of courses on both the undergraduate and graduate levels.