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# 管理会计16.ppt

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Capital Expenditure Decisions 16 Chapter Sixteen Discounted-Cash-Flow Analysis Cost reduction Plant expansion Equipment selection Lease or buy Equipment replacement Net-Present-Value Method Prepare a table showing cash flows for each year, Calculate the present value of each cash flow using a discount rate, present value, If present value (NPV) is positive, accept the investment proposal. Otherwise, reject it. Internal-Rate-of-Return Method The internal rate of return is the true economic return earned by the asset over its life. The internal rate of return puted by finding the discount rate that will cause present value of a project to be zero. Comparing the NPV and IRR Methods Internal Rate of Return The cost of capital pared to the internal rate of return on a project. To be acceptable, a project’s rate of return must be greater than the cost of capital. Net Present Value The cost of capital is used as the actual discount rate. Any project with a present value is rejected. Comparing the NPV and IRR Methods present value method has the following advantages over the internal rate of return method . . . Easier to use. Easier to adjust for risk. Provides more usable information. Assumptions Underlying Discounted-Cash-Flow Analysis All cash flows are treated as though they occur at year end. Cash flows are treated as if they are known with certainty. Cash inflows are immediately reinvested at the required rate of return. Assumes a perfect capital market. e Taxes and Capital Budgeting Cash flows from an investment proposal affect pany’s profit and its e tax liability. e = Revenue - Expenses + Gains - Losses After-Tax Cash Flows The tax rate is 28%, so e taxes are \$525,000 × 28% = \$147,000 Investment in Working Capital Some investment proposals require additional outlays for working capital such as increases in cash, accounts receivable, and inventory. 内容来自淘豆网www.taodocs.com转载请标明出处.