罗斯公司理财Chpt006.ppt

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1、CorporateFinanceRossWesterfieldJaffeSixthEditionSixthEdition6ChapterSixSomeAlternativeInvestmentRulesChapterOutline6.1WhyUseNetPresentValue?6.2ThePaybackPeriodRule6.3TheDiscountedPaybackPeriodRule6.4TheAverageAccountingReturn6.5TheInternalRateofReturn6.6ProblemswiththeIRRApproac

2、h6.7TheProfitabilityIndex6.8ThePracticeofCapitalBudgeting6.9SummaryandConclusions6.1WhyUseNetPresentValue?AcceptingpositiveNPVprojectsbenefitsshareholders.NPVusescashflowsNPVusesallthecashflowsoftheprojectNPVdiscountsthecashflowsproperlyTheNetPresentValue(NPV)RuleNetPresentValue(N

3、PV)=TotalPVoffutureCF’s-InitialInvestmentEstimatingNPV:1.Estimatefuturecashflows:howmuch?andwhen?2.Estimatediscountrate3.EstimateinitialcostsMinimumAcceptanceCriteria:AcceptifNPV>0RankingCriteria:ChoosethehighestNPVGoodAttributesoftheNPVRule1.Usescashflows2.UsesALLcashflowsofthepr

4、oject3.DiscountsALLcashflowsproperlyReinvestmentassumption:theNPVruleassumesthatallcashflowscanbereinvestedatthediscountrate.6.2ThePaybackPeriodRuleHowlongdoesittaketheprojectto“payback”itsinitialinvestment?PaybackPeriod=numberofyearstorecoverinitialcostsMinimumAcceptanceCriteria:

5、setbymanagementRankingCriteria:setbymanagementThePaybackPeriodRule(continued)Disadvantages:IgnoresthetimevalueofmoneyIgnorescashflowsafterthepaybackperiodBiasedagainstlong-termprojectsRequiresanarbitraryacceptancecriteriaAprojectacceptedbasedonthepaybackcriteriamaynothaveapositive

6、NPVAdvantages:EasytounderstandBiasedtowardliquidity6.3TheDiscountedPaybackPeriodRuleHowlongdoesittaketheprojectto“payback”itsinitialinvestmenttakingthetimevalueofmoneyintoaccount?Bythetimeyouhavediscountedthecashflows,youmightaswellcalculatetheNPV.6.4TheAverageAccountingReturnRule

7、Anotherattractivebutfatallyflawedapproach.RankingCriteriaandMinimumAcceptanceCriteriasetbymanagementDisadvantages:IgnoresthetimevalueofmoneyUsesanarbitrarybenchmarkcutoffrateBasedonbookvalues,notcashflowsandmarketvaluesAdvantages:TheaccountinginformationisusuallyavailableEasytocal

8、culate6.5TheInternalRateofReturn(