管理会计（第10版） 课件 Chapter 8 Making capital investment decisions

Chapter8MakingcapitalinvestmentdecisionsManagementAccountingforDecisionMakersTenthEditionLEARNINGOUTCOMESYoushouldbeableto:IdentifyandevaluatethefourmaininvestmentappraisalmethodsfoundinpracticeExplainthenatureandimportanceofinvestmentdecisionmakingExplainthemethodsusedtomonitorandcontrolinvestmentprojectsDiscussthepopularityanduseofthefourmaininvestmentappraisalmethodsinpracticeThenatureofinvestmentdecisionsLargeamountsofresourcesareofteninvolvedItisoftendifficultand/orexpensivetobailoutofaninvestmentonceundertakenThescaleofinvestmentbyUKbusinessesBusiness Expenditureonadditionalnon-current assetsasapercentageof: Profitfor End-of-year

theyearnon-currentassetsVodafoneplc(telecommunications) 293 8RyanairHoldingsplc(airline) 10118SevernTrentWaterplc(waterandsewerage) 2517JDWetherspoonplc(puboperator) 173 8MarksandSpencerplc(stores) 1,2006Skyplc(television)

145

9Go-AheadGroupplc(transport) 13619WmMorrisonSupermarketsplc(supermarkets) 161 6Source:Annualreportsofthebusinessesconcernedforthefinancialyearsendingin2018.InvestmentappraisalmethodsFourmethodsofevaluationAccountingrateofreturn(ARR)Paybackperiod(PP)Netpresentvalue(NPV)Internalrateofreturn(IRR)Accountingrateofreturn(ARR)AverageannualprofitAverageinvestmenttoearnthatprofit

ARR=

×100%ARRdecisionruleWherecompetingprojectsexceedtheminimumrate,theonewiththehighestARRshouldbeselectedForaprojecttobeacceptable,itmustachieveatleastaminimumtargetARRProblemswithARRIgnoresthetimingofcashflowsUseofaverageinvestmentUseofaccountingprofitCompetinginvestmentsPaybackperiod(PP)Paybackperiod(PP)TimetakenforinitialinvestmenttoberepaidoutofprojectnetcashinflowsPPdecisionruleIfcompetingprojectshavepaybackperiodsshorterthanmaximumpaybackperiod,theonewiththeshortestpaybackperiodisselectedProjectshouldhaveashorterpaybackperiodthantherequiredmaximumpaybackperiodProblemswithPPDoesnottaketimingofcashflowsfullyintoaccountIgnorescashflowsafterPPDoesnottakeriskfullyintoaccountNotrelatedtowealthmaximisationobjectiveArbitrarilydeterminedtargetpaybackperiodFigure8.1ThecumulativecashflowsofeachprojectinActivity8.6Project1Project3Project2Yr1Cashflows(£000)2008006004009000500300100700Y2Yr3Yr1Yr2Yr1Yr2Yr3Yr4Yr5Y1PaybackperiodInitialoutlayYr3Yr4Yr5Y5Y4NPVinvestmentappraisalmethodMakesalogicalallowanceforthetimingofthosecashflowsConsidersallofthecashflowsforeachinvestmentopportunitySource:Atrill,P.andMcLaney,E.(2009)AccountinganIntroduction,5thedn,PearsonEducation.Figure8.2FactorsinfluencingthereturnrequiredbyinvestorsfromaprojectThepresentvalueofacashflowPVofthecashflowofyearn=actualcashflowofyearndividedby(1+r)nNetpresentvalue(NPV)decisionruleIfcompetingprojectshavepositiveNPVs,theonewiththehighestNPVisselectedIfprojectNPVispositive,itshouldbeaccepted;ifitisnegative,itshouldberejectedFigure8.3Presentvalueof£1receivableatvarioustimesinthefuture,assuminganannualfinancingcostof20percent065432178910Yearsintothefuture102030405060708090100Pence£1WhyNPVisbetterthanARRandPPThewholeoftherelevantcashflowsTheobjectivesofthebusinessThetimingofthecashflowsNPVfullyaddresseseachofthefollowing:Internalrateofreturn(IRR)Internalrateofreturn(IRR)Thediscountrate,which,whenappliedtothefutureprojectcashflows,producesazeroNPVIRRdecisionruleIfcompetingprojectsexceedminimumIRRrequirement,theonewiththehighestIRRisselectedProjectmustmeetaminimumIRRrequirement

(theopportunitycostoffinance)Figure8.4TherelationshipbetweentheNPVandIRRmethodsNPV(£000)Costofcapital(%)10203040506070010203040IRR−10ProblemswithIRRDoesnotdirectlyaddresswealthmaximisationIgnoresthescaleofinvestmentHasdifficultywithunconventionalcashflowsSomepracticalpointsrelatedtoinvestmentappraisalPastcostsCommonfuturecostsOpportunitycostsTaxationYear-endassumptionsCashflowsnotprofitflowsInterestpaymentsOtherfactorsSource:AdaptedfromAtrill,P.andMcLaney,E.(2013)AccountingandFinanceforNon-Specialists,8thedn,PearsonEducation.Figure8.5ThemaininvestmentappraisalmethodsInvestmentappraisalinpracticeManysurveyshaveshownthefollowingfeatures:NPVandIRRhavebecomeincreasinglypopularContinuedpopularityofthePPandARRmethodsBusinessestendtousemorethanonemethodLargerbusinessesrelymoreheavilyonNPVandIRRthansmallerbusinessesAmultinationalsurveyofbusinesspracticeUSUKGermanyCa