理财知识-公司理财双语npv 精品

Project
A B C
C0
C1 C2
- 2000 500 500
- 2000 500 1800
- 2000 1800 500
C3
5000 0 0
Payback Period
NPV@ 10%
Payback
Example
Examine the three projects and note the mistake we would make if we insisted on only taking projects with a payback period of 2 years or less.
CFO Decision Tools
Survey Data on CFO Use of Investment Evaluation Techniques
NPV, 75%
IRR, 76%
Payback, 57% Book rate of return, 20% Profitability Index, 12% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Estimating NPV:
1. Estimate future cash flows: how much? and when?
2. Estimate discount rate 3. Estimate initial costs
NPV – Decision Rule
If the NPV is positive, accept the project A positive NPV means that the project is
Project
A B C
C0
C1 C2
- 2000 500 500
- 2000 500 1800
- 2000 1800 500
C3
5000 0 0
Payback Period
3 2 2
expected to add value to the firm and will therefore increase the wealth of the owners. Since our goal is to increase owner wealth, NPV is a direct measure of how well this project will meet our goal.
Payback
Example
Examine the three projects and note the mistake we would make if we insisted on only taking projects with a payback period of 2 years or less.
Does the decision rule adjust for risk? Does the decision rule provide information on
whether we are creating value for the firm?
9-4
Net Present Value
SOURCE: Graham and Harvey, “The Theory and Practice of Finance: Evidence from the Field,” Journal of Financial Economics 61 (2001), pp. 187-243.
Good Decision Criteria
The difference between the market value of a project and its cost.
Net Present Value (NPV) = ﹣Initial Investment + Total PV of future CF’s
9-5
NPV – Decision Rule
Corporate Finance
Chapter 9
Why Net Present Value Leads to Better Investment
Decisions than Other Criteria
McGraw Hill/Irwin
Topics Covered
NPV and its Competitors The Payback Period The Average Accounting Return Internal Rate of Return Capital Rationing
9-7
NPV – Decision Rule
Minimum Acceptance Criteria: Accept if NPV >0
Ranking Criteria: Choose the highest NPV
Example9.1 see page263
Payback
The payback period of a project is the number of years it takes before the cumulative forecasted cash flow equals the initial outlay.
We need to ask ourselves the following questions when evaluating capital budgeting decision rules:
Does the decision rule ad源自文库ust for the time value of money?
The payback rule says only accept projects that “payback” in the desired time frame.
This method is very flawed, primarily because it ignores later year cash flows and the the present value of future cash flows.