TheBasicsofCapitalBudgeting(英文版)学习课件.pptx
Shouldwebuildthisplant?CHAPTER11
TheBasicsofCapitalBudgeting
Whatiscapitalbudgeting?Analysisofpotentialadditionstofixedassets.Long-termdecisions;involvelargeexpenditures.Veryimportanttofirm’sfuture.
Steps
1.EstimateCFs(inflowsoutflows).2.AssessriskinessofCFs.3.Determinek=WACC(adj.).4.FindNPVand/orIRR.5.AcceptifNPV0and/orIRRWACC.
Whatisthedifferencebetweenindependentandmutuallyexclusiveprojects?
Projectsare: independent,ifthecashflowsofoneareunaffectedbytheacceptanceoftheother. mutuallyexclusive,ifthecashflowsofonecanbeadverselyimpactedbytheacceptanceoftheother.
AnExampleofMutuallyExclusiveProjectsBRIDGEvs.BOATtogetproductsacrossariver.
NormalCashFlowProject:Cost(negativeCF)followedbyaseriesofpositivecashinflows.Onechangeofsigns.NonnormalCashFlowProject:Twoormorechangesofsigns.Mostcommon:Cost(negativeCF),thenstringofpositiveCFs,thencosttocloseproject.Nuclearpowerplant,stripmine.
Inflow(+)orOutflow(-)inYear012345NNN-+++++N-++++-NN---+++N+++---N-++-+-NN
Whatisthepaybackperiod?Thenumberofyearsrequiredtorecoveraproject’scost,orhowlongdoesittaketogetourmoneyback?
PaybackforProjectL
(Long:LargeCFsinlateryears100=CFtCumulative-100-90-3050PaybackL2 + 30/80 =2.375years01002.480
ProjectS(Short:CFscomequickly)7020500123-100CFtCumulative-100-302040PaybackL1+30/50 =1.6years10001.6=
StrengthsofPayback:1. Providesanindicationofaproject’sriskandliquidity.2. Easytocalculateandunderstand.WeaknessesofPayback:1. IgnorestheTVM.2. IgnoresCFsoccurringafterthepaybackperiod.
DiscountedPayback:UsesdiscountedratherthanrawCFs.1080600123CFtCumulative-100-90.91-41.3218.79Discountedpayback2+41.32/60.11=2.7yearsPVCFt-100-10010%9.0949.5960.11=Recoverinvest.+cap.costsin2.7years.
NPV: SumofthePVsofinflowsandoutflows.
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