财务管理英文版课件.ppt

1、u Project Evaluation and Selectionu Potential Difficultiesu Capital Rationingu Project Monitoringu Post-Completion Auditu Payback Period(PBP)u Internal Rate of Return(IRR)u Net Present Value(NPV)u Profitability Index(PI)Julie Miller is evaluating a new project for her firm,Basket Wonders(BW).She has

2、 determined that the after-tax cash flows for the project will be$10,000;$12,000;$15,000;$10,000;and$7,000,respectively,for each of the Years 1 through 5.The initial cash outlay will be$40,000.-A project whose acceptance(or rejection)does not prevent the acceptance of other projects under considerat

3、ion.uFor this project,assume that it is independent of any other potential projects that Basket Wonders may undertake.is the period of time required for the cumulative expected cash flows from an investment project to equal the initial cash outflow.0 1 2 3 4 5 -40 K 10 K 12 K 15 K 10 K 7 K(c)10 K 22

4、 K 37 K 47 K 54 K=a+(b-c)/d=3+(40-37)/10=3+(3)/10=0 1 2 3 4 5 -40 K 10 K 12 K 15 K 10 K 7 KCumulativeInflows(a)(-b)(d)=3+(3K)/10K=Note:Take absolute value of last negative cumulative cash flow value.CumulativeCash Flows -40 K 10 K 12 K 15 K 10 K 7 K0 1 2 3 4 5-40 K -30 K -18 K -3 K 7 K 14 KYes!The f

5、irm will receive back the initial cash outlay in less than 3.5 years.3.3 Years 3.5 Year Max.The management of Basket Wonders has set a maximum PBP of 3.5 years for projects of this type.Should this project be accepted?u Easy to use and understandu Can be used as a measure of liquidityu Easier to for

6、ecast ST than LT flowsu Does not account for TVMu Does not consider cash flows beyond the PBPu Cutoff period is subjectiveIRR is the discount rate that equates the present value of the future net cash flows from an investment project with the projects initial cash outflow.CF1 CF2 CFn(1+IRR)1 (1+IRR)

7、2 (1+IRR)n+.+ICO=$15,000$10,000$7,000$10,000$12,000(1+IRR)1 (1+IRR)2Find the interest rate(IRR)that causes the discounted cash flows to equal$40,000.+$40,000=(1+IRR)3 (1+IRR)4 (1+IRR)5=$10,000(PVIF10%,1)+$12,000(PVIF10%,2)+$15,000(PVIF10%,3)+$10,000(PVIF10%,4)+$7,000(PVIF10%,5)=$10,000(.909)+$12,000

8、(.826)+$15,000(.751)+$10,000(.683)+$7,000(.621)=$9,090+$9,912+$11,265+$6,830+$4,347 =$10,000(PVIF15%,1)+$12,000(PVIF15%,2)+$15,000(PVIF15%,3)+$10,000(PVIF15%,4)+$7,000(PVIF15%,5)=$10,000(.870)+$12,000(.756)+$15,000(.658)+$10,000(.572)+$7,000(.497)=$8,700+$9,072+$9,870+$5,720+$3,479 =.10$41,444.05IRR

9、$40,000$4,603.15$36,841 X$1,444.05$4,603$1,444X=.10$41,444.05IRR$40,000$4,603.15$36,841 X$1,444.05$4,603$1,444X=.10$41,444.05IRR$40,000$4,603.15$36,841($1,444)(0.05)$4,603$1,444XX=X=.0157IRR=.10+.0157=.1157 or 11.57%No!The firm will receive 11.57%for each dollar invested in this project at a cost of

10、 13%.IRR Hurdle Rate The management of Basket Wonders has determined that the hurdle rate is 13%for projects of this type.Should this project be accepted?u Accounts for TVMu Considers all cash flowsu Less subjectivityu Assumes all cash flows reinvested at the IRRu Difficulties with project rankings

11、and Multiple IRRs NPV is the present value of an investment projects net cash flows minus the projects initial cash outflow.CF1 CF2 CFn(1+k)1 (1+k)2 (1+k)n+.+-NPV=Basket Wonders has determined that the appropriate discount rate(k)for this project is 13%.$10,000$7,000$10,000$12,000$15,000(1.13)1 (1.1

12、3)2 (1.13)3+-(1.13)4 (1.13)5=+=$10,000(PVIF13%,1)+$12,000(PVIF13%,2)+$15,000(PVIF13%,3)+$10,000(PVIF13%,4)+$7,000(PVIF13%,5)-=$10,000(.885)+$12,000(.783)+$15,000(.693)+$10,000(.613)+$7,000(.543)-=$8,850+$9,396+$10,395+$6,130+$3,801-=-No!The NPV is negative.This means that the project is reducing sha

13、reholder wealth.as The management of Basket Wonders has determined that the required rate is 13%for projects of this type.Should this project be accepted?u Cash flows assumed to be reinvested at the hurdle rate.u Accounts for TVM.u Considers all cash flows.u May not include managerial options embedd

14、ed in the project.See Chapter 14.Discount Rate(%)0 3 6 9 12 15IRRNPV13%Sum of CFsPlot NPV for eachdiscount rate.Three of these points are easy now!Net Present Value$000s151050-4 PI is the ratio of the present value of a projects future net cash flows to the projects initial cash outflow.CF1 CF2 CFn(

15、1+k)1 (1+k)2 (1+k)n+.+PI=PI=1+/No!The is less than 1.00.This means that the project is not profitable.as =$38,572/$40,000=.9643(Method#1,13-33)Should this project be accepted?Same as NPVu Allows comparison of different scale projectsSame as NPVu Provides only relative profitabilityu Potential Rankin

16、g ProblemsMethod Project Comparison Decision PBP 3.3 3.5 Accept IRR 11.47%13%Reject NPV-$1,424$0 Reject PI.96 1.00 Reject Basket Wonders Independent Project-A project whose acceptance precludes the acceptance of one or more alternative projects.-A project whose acceptance depends on the acceptance o

17、f one or more other projects.Ranking of project proposals may create contradictory results.Compare a small(S)and a large(L)project.NET CASH FLOWSProject S Project LEND OF YEAR 0 -$100 -$100,000 1 0 0 2$400$156,250Calculate the PBP,IRR,NPV10%,and PI10%.Which project is preferred?Why?Project IRR NPV P

18、I S 100%$231 3.31 L 25%$29,132 1.29Let us compare a decreasing cash-flow(D)project and an increasing cash-flow(I)project.NET CASH FLOWSProject D Project IEND OF YEAR 0 -$1,200 -$1,200 1 1,000 100 2 500 600 3 100 1,080 D 23%I 17%Calculate the IRR,NPV10%,and PI10%.Which project is preferred?Project IR

19、R NPV PI?Discount Rate(%)0 5 10 15 20 25-200 0 200 400 600IRRNPV10%Plot NPV for eachproject at variousdiscount rates.Net Present Value($)Discount Rate($)0 5 10 15 20 25-200 0 200 400 600Net Present Value($)Let us compare a long life(X)project and a short life(Y)project.NET CASH FLOWSProject X Projec

20、t YEND OF YEAR 0 -$1,000 -$1,000 1 0 2,000 2 0 0 3 3,375 0 X 50%$1,536 2.54 Y 100%$818 1.82Calculate the PBP,IRR,NPV10%,and PI10%.Which project is preferred?Why?Project IRR NPV PI?1.Adjust cash flows to a common terminal year if project“Y”will be replaced.Compound Project Y,Year 1 10%for 2 years.Yea

21、r 0 1 2 3CF -$1,000$0$0$2,420Results:IRR*=34.26%NPV=$818*Lower IRR from adjusted cash-flow stream.X is still Best.2.Use Replacement Chain Approach(Appendix B)when project“Y”will be replaced.0 1 2 3Results:IRR*=100%=*Higher NPV,but the same IRR.Capital Rationing occurs when a constraint(or budget cei

22、ling)is placed on the total size of capital expenditures during a particular period.Example:Julie Miller must determine what investment opportunities to undertake for Basket Wonders(BW).She is limited to a maximum expenditure of$32,500 only for this capital budgeting period.Project ICO IRR NPV PIA$5

23、00 18%$50 1.10 B 5,000 25 6,500 2.30 C 5,000 37 5,500 2.10 D 7,500 20 5,000 1.67 E12,500 26 500 1.04 F15,000 28 21,000 2.40 G17,500 19 7,500 1.43 H25,000 15 6,000 1.24 Project ICO IRR NPV PIC$5,00037%$5,500 2.10 F15,000 28 21,000 2.40 E12,50026 500 1.04 B 5,00025 6,500 2.30 Projects C,F,and E have t

24、he three largest IRRs.The resulting increase in shareholder wealth is$27,000 with a$32,500 outlay.Project ICO IRR NPV PI F$15,000 28%$21,000 2.40 G17,50019 7,500 1.43 B 5,00025 6,500 2.30Projects F and G have the two largest NPVs.The resulting increase in shareholder wealth is$28,500 with a$32,500 o

25、utlay.Project ICO IRR NPV PI F$15,000 28%$21,000 2.40B 5,000 25 6,500 2.30 C 5,000 37 5,500 2.10 D 7,500 20 5,000 1.67 G 17,500 19 7,500 1.43Projects F,B,C,and D have the four largest PIs.The resulting increase in shareholder wealth is$38,000 with a$32,500 outlay.Method Projects Accepted Value Added

26、 PI F,B,C,and D$38,000 NPV F and G$28,500 IRRC,F,and E$27,000 generates the in when a limited capital budget exists for a single period.Post-completion AuditA formal comparison of the actual costs and benefits of a project with original estimates.u Identify any project weaknessesu Develop a possible

27、 set of corrective actionsu Provide appropriate feedbackResult:Making better future decisions!There are as many potential IRRs as there are sign changes.Let us assume the following cash flow pattern for a project for Years 0 to 4:-$100 +$100 +$900 -$1,000*Refer to Appendix A1、有事业的峰峦上，有汗水的溪流飞淌；在智慧的珍珠

28、里，有勤奋的心血闪光。2、人们走过的每一个足迹，都是自己生命的留言；留给今天翻过的日历，留给未来永久的历史。3、人生是一座可以采掘开拓的金矿，但总是因为人们的勤奋程度不同，给予人们的回报也不相同。4、理想之风扯满人生的帆；奋斗之杆举起理想之旗。5、人应该学会走自己的路，但更应该掌握手中的罗盘。6、不能因为人生的道路坎坷，就使自己的身躯变得弯曲；不能因为生活的历程漫长，就使求索的脚步迟缓。7、人生的意义在理想的光辉中闪烁；生命的价值在创造的生活中闪现。8、只有走完平凡的路程，才能达到伟大的目标。9、奋斗目标是人生的精神支柱。10、共同的事业，共同的斗争，可以使人们产生忍受一切的力量。奥斯特洛夫斯

29、基11、属于每个人的道路，都在每个人的足下；属于每个人的历史，都在每个人的身后。12、终于有一天，海水和泪都是甜的。13、有志者自有千方百计，无志者只有千难万难。14、贫不足羞，可羞是贫而无志。吕坤15、人，只要有一种信念，有所追求，什么艰苦都能忍受，什么环境也都能适应。丁玲16、人生的途程是遥远的，只要双脚不息地前行，道路就会向远方延伸。17、理想是人生的坚实支柱，如果失去了生活的理想，精神也就会随之而瘫痪。18、目标不是都能达到的，但它可以作为瞄准点。28、我学习了一生，现在我还在学习，而将来，只要我还有精力，我还要学习下去。别林斯基29、任何时候我也不会满足，越是读书，就越是深刻的感到不

30、满足，越是感到自己的知识贫乏。马克思30、外国语是人生斗争的一种武器。马克思31、学习这件事不在乎有没有人教你，最重要的是在于你自己有没有觉悟和恒心。法布尔32、笔落惊风雨,诗成泣鬼神。杜甫33、别裁伪体亲风雅,转益多师是汝师。杜甫28、我学习了一生，现在我还在学习，而将来，只要我还有精力，我还要学习下去。别林斯基29、任何时候我也不会满足，越是读书，就越是深刻的感到不满足，越是感到自己的知识贫乏。马克思30、外国语是人生斗争的一种武器。马克思31、学习这件事不在乎有没有人教你，最重要的是在于你自己有没有觉悟和恒心。法布尔32、笔落惊风雨,诗成泣鬼神。杜甫33、别裁伪体亲风雅,转益多师是汝师。杜甫