<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-size: 10pt;"><span style="font-family: Times New Roman;">This paper demonstrates how to build risk into capital investment decisions.<span style="mso-spacerun: yes;"> </span>We illustrate how to combine distribution theory, technology, and a business professional’s skills and insight into a capital investment analysis.<span style="mso-spacerun: yes;"> </span>In addition, we show how management can approximate the risk of each cash flow estimate and display the overall capital investment results.<span style="mso-spacerun: yes;"> </span>This framework is extended by showing how a mutually exclusive decision can be improved, using a lease versus purchase example.</span><a style="mso-footnote-id: ftn1;" name="_ftnref1" href="http://journals.cluteonline.com/index.php/JABR/author/saveSubmit/#_ftn1"><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span style="font-family: "Times New Roman","serif"; font-size: 10pt; mso-fareast-font-family: 'Times New Roman'; mso-fareast-language: EN-US; mso-ansi-language: EN-US; mso-bidi-language: AR-SA;">[1]</span></span></span></span></a><span style="font-family: Times New Roman;"><span style="mso-spacerun: yes;"> </span>An Excel template is readily available from the authors allowing a hands-on application of the framework presented in this paper.<span style="mso-spacerun: yes;"> </span>In addition, this paper positions the reader to comfortably use more advanced analytics, such as Monte Carlo simulation, a tool that is readily available in commercial software applications.</span></span></p><div style="mso-element: footnote-list;"><br /><span style="font-family: Times New Roman;"><hr size="1" /></span><div id="ftn1" style="mso-element: footnote;"><p class="MsoFootnoteText" style="text-align: justify; margin: 0in 0in 0pt;"><span style="font-size: 9pt;"><span style="font-family: Times New Roman;">This paper focuses on the application of net present value.<span style="mso-spacerun: yes;"> </span>The advantage of using net present value in a capital budgeting decision is that it shows the potential stakeholder wealth creation and wealth destruction.<span style="mso-spacerun: yes;"> </span>An internal rate of return analysis is intentionally left out of this paper.<span style="mso-spacerun: yes;"> </span>According to Brealey, Myers and Allen, <em style="mso-bidi-font-style: normal;">Principles of Corporate Finance</em>, New York, NY: McGraw-Hill/Irwin 2006, pp. 91-99, internal rate of return should not be used to evaluate mutually exclusive capital investments.<span style="mso-spacerun: yes;"> </span></span></span></p></div></div>