25、的公司财务原理课件全英文

1、Making Investment Decisions with the Net Present Value RulePrinciples of Corporate FinanceSeventh EditionRichard A. Brealey Stewart C. MyersSlides byMatthew WillChapter 6McGraw Hill/IrwinCopyright 2003 by The McGraw-Hill Companies, Inc. All rights reserved Topics CoveredWhat To DiscountIM&C ProjectP

2、roject InteractionEquivalent Annual CostReplacementProject InteractionTimingFluctuating Load FactorsWhat To DiscountOnly Cash Flow is RelevantWhat To DiscountDo not confuse average with incremental payoffsInclude all incidental effectsDo not forget working capital requirementsForget sunk costsInclud

3、e opportunity costsBeware of allocated overhead costsPoints to “Watch Out For”Be consistent in how you handle inflation!Use nominal interest rates to discount nominal cash flows.Use real interest rates to discount real cash flows.You will get the same results, whether you use nominal or real figures

4、InflationINFLATION RULEInflationExampleYou own a lease that will cost you $8,000 next year, increasing at 3% a year (the forecasted inflation rate) for 3 additional years (4 years total). If discount rates are 10% what is the present value cost of the lease?InflationExample - nominal figuresInflatio

5、nExample - real figuresIM&Cs Guano ProjectRevised projections ($1000s) reflecting inflationIM&Cs Guano ProjectNPV using nominal cash flowsIM&Cs Guano ProjectCash flow analysis ($1000s)IM&Cs Guano ProjectDetails of cash flow forecast in year 3 ($1000s)IM&Cs Guano ProjectTax depreciation allowed under

6、 the modified accelerated cost recovery system (MACRS) (Figures in percent of depreciable investment)IM&Cs Guano ProjectTax Payments ($1000s)IM&Cs Guano ProjectRevised cash flow analysis ($1000s)Equivalent Annual CostEquivalent Annual Cost - The cost per period with the same present value as the cos

7、t of buying and operating a machine.Equivalent Annual CostEquivalent Annual Cost - The cost per period with the same present value as the cost of buying and operating a machine.ExampleGiven the following costs of operating two machines and a 6% cost of capital, select the lower cost machine using eq

8、uivalent annual cost method.YearMachine1234PV6%EACA1555528.3710.61B106621.0011.45Equivalent Annual CostTimingEven projects with positive NPV may be more valuable if deferred.The actual NPV is then the current value of some future value of the deferred project.TimingExampleYou may harvest a set of tr

9、ees at anytime over the next 5 years. Given the FV of delaying the harvest, which harvest date maximizes current NPV?TimingExample - continuedYou may harvest a set of trees at anytime over the next 5 years. Given the FV of delaying the harvest, which harvest date maximizes current NPV?TimingExample - continuedYou may harvest a set of trees at anytime over the next 5 years. Given