成本预算英文版课件
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• Amounts of money spent or received at different periods of time must be converted into their value on a common date in order to be compared
成本预算英文版课件
成本预算英文版课件
Time Value of Money
A dollar today is worth more than a dollar a year from now since a dollar
received today can be invested, yielding more than a dollar a year from
成本预算英文版课件
成本预算英文版课件
Types of Capital Budgeting Decisions
• Should we add a new product to our existing product line?
• Should we expand into a new market? • Should we replace our existing machinery? • Should we buy fully automatic or semiautomatic
§ Calculator, tables, or spreadsheet software
成本预算英文版课件
Present Value (Graphic)
Assume that you need to have exactly $4,000 saved 10 years from now. How much must you deposit today in an account that pays 6% interest, compounded annually, so that you reach your goal of $4,000?
CIn = P0 (1+i)n
成本预算英文版课件
Present Value
• Analysts call a future cash flow’s value at time zero its present value
• The process of computing present value is called discounting
machinery • Where to locate manufacturing facility?
成本预算英文版课件
Investment and Return
• Investment and return form the foundation of capital budgeting analysis, which focuses on whether the expected increased cash flows (return) will justify the investment in the long-term asset
成本预算英文版课件
Types of Interest
Simple Interest
Interest paid (earned) on only the original amount, or principal borrowed (lent).
SIn = P0(1+ i ×n)
• Compound Interest Interest paid (earned) on any previous interest earned, as well as on the principal borrowed (lent).
§ We need an equivalent basis to compare the cash flows that occur at different points in time
成本预算英文版课件
Time Value of Money (2 of 2)
• The critical idea underlying capital budgeting is:
§ The amount of money committed to the acquisition of capital assets is usually quite large
§ The long-term nature of capital assets creates technological risk
Some Standard Notation
• For simplicity, the following notation is used:
Abbr.
Meaning
n
Number of periods considered in the investment analysis;
common period lengths are a month, a quarter, or a year
0
5
6%
PV0
10
$4,000
成本预算英文版课件
Quick Check ✓
How much would you have to put in the bank today to have $100 at the end of five years if the interest rate is 10%? PV or FV? Table: ____ a. $62.10 b. $56.70 c. $90.90 d. $51.90
a
Annuity, or equal amount, received or paid at the end of each
period for n periods
r
Rate of return required, or expected, from an investment
opportunity; the rate of interest earned on an investment
FV
Future value, or ending value, of the investment n periods
from now
PV Present value, or the value at the current moment in time, of
an amount to be received n periods from now
成本预算英文版课件
Quick Check ✓
How much would you have to put in the bank today to have $100 at the end of five years if the interest rate is 10%? a. $62.10
b. $56.70 $100 0.621 = $62.10
c. $90.90 d. $51.90
成本预算英文版课件
PRESENT VALUE OF $1
PRESENT VALUE Year 5% 10% 15%
1 .952 .909 .870 2 .907 .826 .756 5 .784 .621 .497 10 .614 .386 .247 20 .377 .149 .061
• Investment is the monetary value of the assets the organization gives up to acquire a long-term asset which are often called capital outlays.
• Return is the increased future cash inflows attributable to the long-term asset
成本预算英文版课件
2020/11/18
成本预算英文版课件
Capital Budgeting
Chapter 11
成本预算英文版课件
Long-Term (Capital) Assets
• Capital assets are equipment or facilities that provide services to the organization for more than one fiscal period.
成本预算英文版课件
PRESENT VALUE OF $1
PRESENT VALUE Year 5% 10% 15%
• We can rearrange the FV formula to compute the present value:
FV = PV x (1 + r)n PV = FV/(1 + r)n or PV = FV x (1 + r)-n
• Methods similar to those described earlier may be used to compute this value
now.
成本预算英文版课件
Time Value of Money (1 of 2)
• Time value of money (TVM) is a central concept in capital budgeting
• In making investment decisions, the problem is that investment cash is paid out now, but the cash return is received in the future
• Capital assets create these capacity-related costs
成本预算英文版课件
Need to Control Capital Assets
• Organizations have developed specific tools to control the acquisition and use of long-term assets because:
§ Organizations are usually committed to long-term assets for an extended time, creating the potential for • Excess capacity that creates excess costs • Scarce capacity that creates lost opportunities
• Capital budgeting has three phases:
§ Identifying potential investments, § Choosing which investments to make, and § Follow-up monitoring of the investments.
成本预算英文版课件
The Time Value of Money
Which would you rather hΒιβλιοθήκη Baiduve -- $1,000 today or $1,000 in 5 years?
Obviously, $1,000 today. Money received sooner rather than later allows one to use the funds for investment or consumption purposes. This concept is referred to as the TIME VALUE OF MONEY!!
§ Reduce an organization’s flexibility
成本预算英文版课件
Meaning of Capital Budgeting
• Capital budgeting can be defined as the process of analyzing, evaluating, and deciding whether resources should be allocated to a project or not.
成本预算英文版课件
成本预算英文版课件
Time Value of Money
A dollar today is worth more than a dollar a year from now since a dollar
received today can be invested, yielding more than a dollar a year from
成本预算英文版课件
成本预算英文版课件
Types of Capital Budgeting Decisions
• Should we add a new product to our existing product line?
• Should we expand into a new market? • Should we replace our existing machinery? • Should we buy fully automatic or semiautomatic
§ Calculator, tables, or spreadsheet software
成本预算英文版课件
Present Value (Graphic)
Assume that you need to have exactly $4,000 saved 10 years from now. How much must you deposit today in an account that pays 6% interest, compounded annually, so that you reach your goal of $4,000?
CIn = P0 (1+i)n
成本预算英文版课件
Present Value
• Analysts call a future cash flow’s value at time zero its present value
• The process of computing present value is called discounting
machinery • Where to locate manufacturing facility?
成本预算英文版课件
Investment and Return
• Investment and return form the foundation of capital budgeting analysis, which focuses on whether the expected increased cash flows (return) will justify the investment in the long-term asset
成本预算英文版课件
Types of Interest
Simple Interest
Interest paid (earned) on only the original amount, or principal borrowed (lent).
SIn = P0(1+ i ×n)
• Compound Interest Interest paid (earned) on any previous interest earned, as well as on the principal borrowed (lent).
§ We need an equivalent basis to compare the cash flows that occur at different points in time
成本预算英文版课件
Time Value of Money (2 of 2)
• The critical idea underlying capital budgeting is:
§ The amount of money committed to the acquisition of capital assets is usually quite large
§ The long-term nature of capital assets creates technological risk
Some Standard Notation
• For simplicity, the following notation is used:
Abbr.
Meaning
n
Number of periods considered in the investment analysis;
common period lengths are a month, a quarter, or a year
0
5
6%
PV0
10
$4,000
成本预算英文版课件
Quick Check ✓
How much would you have to put in the bank today to have $100 at the end of five years if the interest rate is 10%? PV or FV? Table: ____ a. $62.10 b. $56.70 c. $90.90 d. $51.90
a
Annuity, or equal amount, received or paid at the end of each
period for n periods
r
Rate of return required, or expected, from an investment
opportunity; the rate of interest earned on an investment
FV
Future value, or ending value, of the investment n periods
from now
PV Present value, or the value at the current moment in time, of
an amount to be received n periods from now
成本预算英文版课件
Quick Check ✓
How much would you have to put in the bank today to have $100 at the end of five years if the interest rate is 10%? a. $62.10
b. $56.70 $100 0.621 = $62.10
c. $90.90 d. $51.90
成本预算英文版课件
PRESENT VALUE OF $1
PRESENT VALUE Year 5% 10% 15%
1 .952 .909 .870 2 .907 .826 .756 5 .784 .621 .497 10 .614 .386 .247 20 .377 .149 .061
• Investment is the monetary value of the assets the organization gives up to acquire a long-term asset which are often called capital outlays.
• Return is the increased future cash inflows attributable to the long-term asset
成本预算英文版课件
2020/11/18
成本预算英文版课件
Capital Budgeting
Chapter 11
成本预算英文版课件
Long-Term (Capital) Assets
• Capital assets are equipment or facilities that provide services to the organization for more than one fiscal period.
成本预算英文版课件
PRESENT VALUE OF $1
PRESENT VALUE Year 5% 10% 15%
• We can rearrange the FV formula to compute the present value:
FV = PV x (1 + r)n PV = FV/(1 + r)n or PV = FV x (1 + r)-n
• Methods similar to those described earlier may be used to compute this value
now.
成本预算英文版课件
Time Value of Money (1 of 2)
• Time value of money (TVM) is a central concept in capital budgeting
• In making investment decisions, the problem is that investment cash is paid out now, but the cash return is received in the future
• Capital assets create these capacity-related costs
成本预算英文版课件
Need to Control Capital Assets
• Organizations have developed specific tools to control the acquisition and use of long-term assets because:
§ Organizations are usually committed to long-term assets for an extended time, creating the potential for • Excess capacity that creates excess costs • Scarce capacity that creates lost opportunities
• Capital budgeting has three phases:
§ Identifying potential investments, § Choosing which investments to make, and § Follow-up monitoring of the investments.
成本预算英文版课件
The Time Value of Money
Which would you rather hΒιβλιοθήκη Baiduve -- $1,000 today or $1,000 in 5 years?
Obviously, $1,000 today. Money received sooner rather than later allows one to use the funds for investment or consumption purposes. This concept is referred to as the TIME VALUE OF MONEY!!
§ Reduce an organization’s flexibility
成本预算英文版课件
Meaning of Capital Budgeting
• Capital budgeting can be defined as the process of analyzing, evaluating, and deciding whether resources should be allocated to a project or not.