ABSTRACT
In Chapter 4, we developed a model that simulated the nancial statements in very general form. To introduce the subject and understand the structure of the model, the number and detail of the di erent accounts was kept to a minimum. It was noted that once we developed a functioning model, we could always add detail to expand it to meet our needs. In this chapter, we discuss how to develop more detailed treatments of long-term assets. We look at ways to model the investment in xed assets. First, we consider ways to include xed assets in the long-run planning model where the assets are driven by the sales forecast; second, in the capital budgeting section, we will develop a model where the investment in assets is the driver for the purpose of evaluating the investment in xed assets; and third, we look at the decision to acquire and/or merge with another company as a capital budgeting decision.
