Capital Budgeting Time Value of Money and Cost Benefit Analysis Process Structure and Basic Tools推荐.pdf

CHAPTER 6 Capital Budgeting, Time Value of Money, and Cost-Benefit Analysis: Process, Structure, and Basic Tools Capital expenditures purchase physical assets that are expected to provide services for several years; the outlay will yield benefits in the future without having to repeat the purchase.1 Capital spending also includes capital improvements or rehabilitation of physical assets that extends or enhances the useful life of these assets (as distinct from the operating expenditures for repair or maintenance expenditures which assure functionality during the expected life of the asset). Public capital assets, also called infrastructure, become inputs into production of both private and public goods and services. The Congressional Budget Office (CBO) writes, “The production and distribution of private economic output depends on pub- lic transportation and environmental facilities including highways, mass transit, rail- ways, airports and airways, water resources, and water supply and wastewater treatment plants.”2 All these fit directly into production processes yielding private goods and services. Roads, sewers, and transportation systems have become part of the competition between states and localities for new industrial and commercial development, so a sound system of infrastructure finance represents a crucial factor for regional economic growth. But public infrastructure also enters into production processes that deliver public services: elementary and secondary school buildings, park and recreation areas, state hospita