Abstract for: Capital budget decision in hindsight: ILE for learning and decision making
Capital budget decisions materialize the organization's strategic orientation, determine its future, and have a relevant impact on the social and economic environment. Simulation methods are already assisting strategic decisions under uncertainty. When Interactive Learning Environments use System Dynamics models as engine, decision-makers access to better decisions, speed up learning, and can review their mental models following a double loop learning process. A case study of capital budgeting decision making applying these tools to a new business venture is presented and discussed. From reflective practice emerge the recognition of traditional valuation methods shortcomings already pointed in finance literature. Decision-makers would benefit more from the learning process allowed by the use of an Interactive Learning Environment, representing more comprehensively the new business model and its dynamics, than from Discounted Cash Flow based recommendation reports.