《财务管理财务》PPT课件.ppt

Net Present Value and Other Investment Rules
Key Concepts and Skills
Be able pute payback and discounted payback and understand their ings
Understand accounting rates of return and their ings
Be able pute the internal rate of return and profitability index, understand the strengths and weaknesses of both
Be able pute present value and understand why it is the best decision criterion
Chapter Outline
Why Present Value?
The Payback Period Method
The Discounted Payback Period Method
The Average Accounting Return Method
The Internal Rate of Return
Problems with the IRR Approach
The Profitability Index
The Practice of Capital Budgeting
Why Present Value?
企业:投资项目之和
Accepting positive NPV projects benefits shareholders.
NPV uses cash flows
NPV uses all the cash flows of the project
NPV discounts the cash flows properly
Reinvestment assumption: the NPV rule assumes that all cash flows can be reinvested at the discount rate.
Net Present Value (NPV) Rule
Net Present Value (NPV) =
Total PV of future CF’s + Initial Investment
Estimating NPV:
1. Estimate future cash flows: how much? and when?
2. Estimate discount rate
3. Estimate initial costs
Minimum Acceptance Criteria: Accept if NPV > 0
Ranking Criteria: Choose the highest NPV
当NPV=0, accept or abandon?
1 风险调整.
2 难以量化的收益.
3 公司形象.
4 掌握更多财务资源(实物期权).
5 更大规模。
if true, investing in any project with a nonnegative NPV may be desirable
financially or ethically sound
Whether to buy a publication rights of new book “How to Cheat: A User’s Guide.”
The year 0 cash flow is -20,000, year 1 is 60,000 and years 2 and 3 are 30,000 each. Given a cost of capital of 8%, the NPV is just over $85,000.
Will you run a gambling house?
the value of Reputational Capital
The Payback Period Method
How long does it take the project to “pay back” its initial investment?
Payback Period = number of years to recover initial costs
Payback period rule – investment is acceptable if the calculated