capital-budgetinglisted

# Capital Budgeting Decides whether a capital expenditure creates value: **accept if NPV > 0 and IRR > WACC**. ## Decision Rules * **NPV > 0** → value is created; NPV < 0 → value is destroyed (use `engines/npv.js`). * **IRR > WACC** → the project covers its cost of capital (use `engines/irr.js`); compare them — do not use IRR alone when cash flows are unconventional. * **Payback period** = investment ÷ average annual cash flow — a liquidity aid, not a substitute for NPV. * **Simple WACC** = (E÷V × ke) + (D÷V × kd × (1 − tax rate)) — for SMEs: ke = owner's expected return, kd = effective loan interest rate. ## Hybrid Execution Model Pass `cashflows: [−investment, cf1..cfn]` to `engines/npv.js` (`npv(rate, cashflows)`) and `engines/irr.js` (`irr(cashflows, {tolerance: 1e-9})`). Trust Envelope: risk MEDIUM, standard basis (not statutory), `requires_human_review: true` for fund commitments. ## Scope & Safety * **Use for**: machine purchases, branch expansion, project investments — incremental after-tax cash flows. * **Do not use for**: portfolio/stock decisions (not finance core), projects with multi-sign cash flows without further analysis. * The IRR engine throws "No IRR found in range" when cash flows are unconventional — use NPV as the primary decision. * Make sure tax rates & interest are actual (check tax-payroll-id) — do not assume. ## Worked Example Input: machine 2 billion; net cash flow 600 million/year × 5 years; WACC 12% (ke 15% × 60% + kd 10% × 40% × (1 − 22%)).