Capital Budgeting

• Introduction
• Project Financing, Capital Improvements, and Capital Budgeting
• Financing Issues
• Interest Rates and Risk
• Short-Term and Intermediate-Term Debt
• Long-Term Debt
• Rating Agencies
• Credit Enhancement
• Summary
• Notes
• Additional Resources

Introduction

Financing capital acquisitions, renovations, and maintenance is generally the responsibility of an institution's treasurer or chief financial officer. These financial executives have a fiduciary responsibility to ensure that the institution's assets are managed within sound financial guidelines and protected from unnecessary risk of loss or depletion. They work in conjunction with the governing board of the institution to develop and implement financial policies for asset utilization, capital investment, and debt management. Financial policies that address these concerns ensure that capital investments are consistent with the organization's mission, as well as economically and financially viable. In addition, such policies ensure that debt associated with individual projects, as well as aggregate debt, will not jeopardize the institution's credit rating.