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Q: I am looking for an investment analysis tool that I can use for justifying an investment in a new business outside the US. I have a simplistic dcf / payback analysis that is typically used for capital expenditure justification. I am looking at your "Business Valuation Model" but this doesn't seem to take into account initial and recurring capital expenditures required. Do you have a different model or models you can suggest?

A: The valuation model provides both an interest expense which reflects the cost of capital and a Depreciation Allowance which is a capital allownace based on the value of Business Assets and Asset life. So if you have operational capital requirements you can determine the cost of capital ie the interest rate appliacable if the capital was fully financed and apply this as a fixed Interest expense. If the capital relates to depreciaing assests then then it should be reflected as Depreciation (related to Assets and Asset life inputs). If you prefer you can also simply add a recurring capital requirement as an Other expense item. If the required capital varys with sales then enter it as a Varible Other item, if the required capital tends to be a fix overhead amount included it as a Fixed Other item. FYI we have just released a browser based valuation model that applies discounted cash flow to determine NPV it is based on the same methodology as the Business Valuation Model and Business Analysis Modules. It can be assessed from https://bizpep.com/businessanalysis.html re ..

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