《《Topic_2_NPV and Other Investment Rules amp; Making Capital Investment Decisions》.pptx

25765 Corporate FinanceTopic 2;Part 1: Net Present Value and Other Investment Rules;Attributes of Good Evaluation Techniques;Net Present Value (NPV) Rule;Good Attributes of the NPV Rule;Payback Period Rule;Payback Period Rule;Discounted Payback Period Rule;Profitability Index (PI) Rule;Internal Rate of Return (IRR) Rule;IRR:Example;IRR:The NPV Payoff Profile;IRR:Minimum Acceptance Criterion;IRR:Ranking Criterion;Problems with the IRR Approach;1. Multiple IRRs;2. Borrowing vs. Investing;3. The Scale Problem;4. The Timing Problem;4. The Timing Problem;The Crossover Rate;Investment Rules:Summary;Practice of Capital Budgeting;Part 2: Making Capital Investment Decisions;1. Incremental Cash Flows;Incremental Cash Flows;2. Estimating Cash Flows;2. Estimating Cash Flows;3. NPV Example: The Baldwin Company;The Baldwin Company:;Baldwin Company: Depreciation;Baldwin Company: After-tax salvage value;Baldwin Company: Investment cash flows;Baldwin Company: Operating cash flows;Baldwin Company: Operating cash flows;Baldwin Company: Operating cash flows;Baldwin Company: Incremental After-Tax Cash Flows;4. Inflation and Capital Budgeting;Inflation and Capital Budgeting;Inflation and Capital Budgeting;Inflation and Capital Budgeting;Mutually ExclusiveInvestments of Unequal Lives;Investments of Unequal Lives;Investments of Unequal Lives;Investments of Unequal Lives;Investments of Unequal Lives;Investments of Unequal Lives;Replacement project;Replacement project:Autoclave;Replacement cycles:Example;Replacement cycles:Example