Topic 1 Npv And Other Investment Creteria

Net Present Value and Other Investment Criteria

Outline ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Good Decision Criteria ,[object Object],[object Object],[object Object],[object Object]

Project Example Information ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Net Present Value ,[object Object],[object Object],[object Object],[object Object],[object Object]

NPV – Decision Rule ,[object Object],[object Object],[object Object]

Computing NPV for the Project ,[object Object],[object Object],[object Object],[object Object],[object Object]

Decision Criteria Test - NPV ,[object Object],[object Object],[object Object],[object Object]

Calculating NPVs with a Spreadsheet ,[object Object],[object Object],[object Object],[object Object],[object Object]

Payback Period ,[object Object],[object Object],[object Object],[object Object],[object Object]

Computing Payback For The Project ,[object Object],[object Object],[object Object],[object Object],[object Object]

Decision Criteria Test - Payback ,[object Object],[object Object],[object Object],[object Object]

Advantages and Disadvantages of Payback ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Discounted Payback Period ,[object Object],[object Object],[object Object]

Computing Discounted Payback for the Project ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Decision Criteria Test – Discounted Payback ,[object Object],[object Object],[object Object],[object Object]

Advantages and Disadvantages of Discounted Payback ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Average Accounting Return ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Computing AAR For The Project ,[object Object],[object Object],[object Object],[object Object],[object Object]

Decision Criteria Test - AAR ,[object Object],[object Object],[object Object],[object Object]

Advantages and Disadvantages of AAR ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Internal Rate of Return ,[object Object],[object Object],[object Object]

IRR – Definition and Decision Rule ,[object Object],[object Object]

Computing IRR For The Project ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

NPV Profile For The Project IRR = 16.13%

Decision Criteria Test - IRR ,[object Object],[object Object],[object Object],[object Object]

Advantages of IRR ,[object Object],[object Object],[object Object]

Summary of Decisions For The Project Reject Discounted Payback Period Accept Internal Rate of Return Reject Average Accounting Return Reject Payback Period Accept Net Present Value Summary

Calculating IRRs With A Spreadsheet ,[object Object],[object Object],[object Object],[object Object],[object Object]

NPV Vs. IRR ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

IRR and Non-conventional Cash Flows ,[object Object],[object Object],[object Object]

Another Example – Non-conventional Cash Flows ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

NPV Profile IRR = 10.11% and 42.66%

Summary of Decision Rules ,[object Object],[object Object],[object Object]

IRR and Mutually Exclusive Projects ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Example With Mutually Exclusive Projects The required return for both projects is 10%. Which project should you accept and why? 60.74 64.05 NPV 22.17% 19.43% IRR 200 325 2 325 325 1 -400 -500 0 Project B Project A Period

NPV Profiles IRR for A = 19.43% IRR for B = 22.17% Crossover Point = 11.8%

Conflicts Between NPV and IRR ,[object Object],[object Object],[object Object],[object Object],[object Object]

Profitability Index ,[object Object],[object Object],[object Object]

Advantages and Disadvantages of Profitability Index ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Capital Budgeting In Practice ,[object Object],[object Object],[object Object]

Summary – Discounted Cash Flow Criteria ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Summary – Payback Criteria ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Summary – Accounting Criterion ,[object Object],[object Object],[object Object],[object Object],[object Object]

Quick Quiz ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Topic 1 Npv And Other Investment Creteria

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (20)

Similar to Topic 1 Npv And Other Investment Creteria

Similar to Topic 1 Npv And Other Investment Creteria (20)

More from shengvn

More from shengvn (20)

Recently uploaded

Recently uploaded (20)

Topic 1 Npv And Other Investment Creteria