《英文版公司理财课件chapter.ppt》由会员分享，可在线阅读，更多相关《英文版公司理财课件chapter.ppt（26页珍藏版）》请在taowenge.com淘文阁网|工程机械CAD图纸|机械工程制图|CAD装配图下载|SolidWorks_CaTia_CAD_UG_PROE_设计图分享下载上搜索。
1、Chapter 7Net present value and other investment criteria1COPYRIGHTZHULIObjectives1.Calculate the net present value of an investment2.Calculate the internal rate of return of a project and know what to look out for when using the internal rate of return rule3.Explain why the payback rule doesnt alway
2、s make shareholders better off4.Use the net present value rule to analyze three common problems that involve competing projects:(a)when to postpone an investment expenditure,(b)how to choose between projects with unequal lives,and(c)when to replace equipment5.Calculate the profitability index and us
3、e it to choose between projects when funds are limited2ContentnNet present valuenOther investment criterianMore examples of mutually exclusive projectsnCapital rationingnA last look3Net present value:净现值Opportunity cost of capital:资金的机会成本Mutually exclusive projects:互斥项目4nNet present value(NPV):prese
4、nt value of cash flows minus investment nThe net present value rule states that managers increase shareholders wealth by accepting all projects that are worth more than they cost.Therefore,they should accept all projects with a positive net present valuenThe first two steps in calculating NPVs:forec
5、asting the cash flows and estimating the opportunity cost of capital Net present value5Suppose that you have identified a possible tenant who would be prepared to rent your office block for 3 years at a fixed annual rent of$16000.You forecast that after you have collected the third years rent the bu
6、ilding could be sold for$450000.Assume that the opportunity cost of capital is r=7%6nA factory costs$400,000.You reckon that it will produce an inflow after operating costs of$100,000 in year 1,$200,000 in year 2,and$300,000 in year 3.The opportunity cost of capital is 12 percent.Draw up a worksheet
7、 and use tables to calculate the NPV.7When you need to choose among mutually exclusive projects,the decision rule is simple:calculate the NPV of each alternative,and choose the highest positive-NPV projectMutually exclusive projects:two or more projects that cannot be pursued simultaneously8Using th
8、e NPV rule to choose among projectsnReinvestment assumption:the NPV rule assumes that all cash flows can be reinvested at the discount rate.nMinimum Acceptance Criteria:Accept if NPV 0nRanking Criteria:Choose the highest NPV9ContentnNet present valuenOther investment criterianMore examples of mutual
9、ly exclusive projectsnCapital rationingnA last look10Payback period:投资回收期Internal rate of return(IRR):内含报酬率11PaybacknPayback period:time until cash flows recover the initial investment in the project nThe payback rule states that a project should be accepted if its payback period is less than a spec
10、ified cutoff periodnTo use the payback rule,a firm has to decide on an appropriate cutoff period 基准期12nAdvantages nSimplicitynDisadvantagesnPayback does not consider any cash flows that arrive after the payback periodnPayback does not consider the time value of money13Internal rate of returnnTwo rul
11、es for deciding whether to go ahead with an investment project1.The NPV rule.Invest in any project that has a positive NPV when its cash flows are discounted at the opportunity cost of capital2.The rate of return rule.Invest in any project offering a rate of return that is higher than the opportunit
12、y cost of capitalnThe rate of return or internal rate of return(IRR)is the discount rate at which NPV equals zeronThe rate or return rule will give the same answer as the NPV rule as long as the NPV of a project declines smoothly as the discount rate increase14Suppose you rent out the office block f
13、or 3 years,the cash flows are as follows:Trial and error15IRR=12.96%You can accept a project if the rate of return exceeds the opportunity cost of capital16Remember:nThe project IRR measures the profitability of the project.It is an internal rate of return in the sense that it depends only on the pr
14、ojects own cash flows.nThe opportunity cost of capital is the standard for deciding whether to accept the project.It is equal to the return offered by equivalent-risk investments in the capital market.17nSome pitfalls with the internal rate of return rulenWhen NPV is higher as the discount rate incr
15、eases,a project is acceptable only if its internal rate of return is less than the opportunity cost of capital18nWhen there are multiple changes in the sign of the cash flows,the IRR rule does not work,but the NPV rule always does19nA high IRR is not an end in itself.You want projects that increase
16、the value of the firm.Projects that earn a good rate of return for a long time often have higher NPVs than those that offer high percentage rates of return but die young20ContentnNet present valuenOther investment criterianMore examples of mutually exclusive projectsnCapital rationingnA last look21C
17、ontentnNet present valuenOther investment criterianMore examples of mutually exclusive projectsnCapital rationingnA last look22Capital rationing:资本限额、资本约束Soft rationing:资本的软约束Hard rationing:资本的硬约束profitability index:盈利能力指数23nCapital rationing:limit set on the amount of funds available for investment
18、nSoft rationing is not imposed by investors,but imposed by top managementnHard rationing means that the firm actually cannot raise the money it needsnThe solution is to pick the projects that give the highest NPV per dollar investmentnThe ratio of net present value to initial investment is known as the profitability index24ContentnNet present valuenOther investment criterianMore examples of mutually exclusive projectsnCapital rationingnA last look25A comparison of investment decision rules26