taiwan财务管理_lecture8(ch8)

©TheMcGraw-HillCompanies,Inc.,20018-1Irwin/McGraw-HillIrwin/McGraw-HillChapter8FundamentalsofCorporateFinanceThirdEditionProjectAnalysisBrealeyMyersMarcusslidesbyMatthewWillIrwin/McGraw-Hill©TheMcGraw-HillCompanies,Inc.,2001©TheMcGraw-HillCompanies,Inc.,20018-2Irwin/McGraw-HillTopicsCoveredHowFirmsOrganizeTheirInvestmentProcessSome“WhatIf”QuestionsSensitivityAnalysisBreakEvenAnalysisFlexibilityinCapitalBudgetingDecisionTreesOptions©TheMcGraw-HillCompanies,Inc.,20018-3Irwin/McGraw-HillCapitalBudgetingProcessCapitalBudget-Thelistofplannedinvestmentprojects.TheDecisionProcess1-Developandrankallinvestmentprojects2-Authorizeprojectsbasedon:•Govtregulation•Productionefficiency•Capacityrequirements•NPV©TheMcGraw-HillCompanies,Inc.,20018-4Irwin/McGraw-HillCapitalBudgetingProcessCapitalBudgetingProblemsConsistentforecastsConflictofinterestForecastbiasSelectioncriteria(NPVandothers)©TheMcGraw-HillCompanies,Inc.,20018-5Irwin/McGraw-HillHowToHandleUncertaintySensitivityAnalysis-Analysisoftheeffectsofchangesinsales,costs,etc.onaproject.ScenarioAnalysis-Projectanalysisgivenaparticularcombinationofassumptions.SimulationAnalysis-Estimationoftheprobabilitiesofdifferentpossibleoutcomes.BreakEvenAnalysis-Analysisofthelevelofsales(orothervariable)atwhichthecompanybreakseven.©TheMcGraw-HillCompanies,Inc.,20018-6Irwin/McGraw-HillSensitivityAnalysisExampleGiventheexpectedcashflowforecastslistedonthenextslide,determinetheNPVoftheprojectgivenchangesinthecashflowcomponentsusingan8%costofcapital.Assumethatallvariablesremainconstant,excepttheoneyouarechanging.©TheMcGraw-HillCompanies,Inc.,20018-7Irwin/McGraw-HillSensitivityAnalysisYear0Years1-12Investment-5,400Sales16,000VariableCosts13,000FixedCosts2,000Depreciation450Pretaxprofit550.Taxes@40%220Profitaftertax330Operatingcashflow780NetCashFlow-5,400780Example-continuedNPV=$478©TheMcGraw-HillCompanies,Inc.,20018-8Irwin/McGraw-HillSensitivityAnalysisExample-continuedPossibleOutcomesRangeVariablePessimisticExpectedOptimisticInvestment(000s)6,2005,4005,000Sales(000s)14,00016,00018,000VarCost(%ofsales)83%81.25%80%FixedCosts(000s)2,1002,0001,900©TheMcGraw-HillCompanies,Inc.,20018-9Irwin/McGraw-HillSensitivityAnalysisExample-continuedNPVCalculationsforPessimisticInvestmentScenarioYear0Years1-12Investment-6,200Sales16,000VariableCosts13,000FixedCosts2,000Depreciation450Pretaxprofit550.Taxes@40%220Profitaftertax330Operatingcashflow780NetCashFlow-6,200780NPV=($121)©TheMcGraw-HillCompanies,Inc.,20018-10Irwin/McGraw-HillSensitivityAnalysisExample-continuedNPVPossibilitiesNPVsVariablePessimisticExpectedOptimisticInvestment()000(000s)-121478778Sales(000s)-1,2184782,174VarCost(%ofsales)-7884781,382FixedCosts(000s)26478930©TheMcGraw-HillCompanies,Inc.,20018-11Irwin/McGraw-HillBreakEvenAnalysisExampleGiventheforecasteddataonthenextslide,determinethenumberofplanesthatthecompanymustproduceinordertobreakeven,onanNPVbasis.Thecompany’scostofcapitalis10%.©TheMcGraw-HillCompanies,Inc.,20018-12Irwin/McGraw-HillBreakEvenAnalysisYear0Years1-6Investment$900Sales15.5xPlanesSoldVar.Cost8.5xPlanesSoldFixedCosts175Depreciation900/6=150PretaxProfit(7xPlanesSold)-325Taxes(50%)(3.5xPlanesSold)-162.5NetProfit(3.5xPlanesSold)-162.5NetCashFlow-900(3.5xPlanesSold)-12.5©TheMcGraw-HillCompanies,Inc.,20018-13Irwin/McGraw-HillBreakEvenAnalysisAnswerThebreakevenpoint,isthe#ofPlanesSoldthatgeneratesaNPV=$0.Thepresentvalueannuityfactorofa6yearcashflowat10%is4.355Thus,NPVxPlanesSo=-900+435535.(.ld-12.5)©TheMcGraw-HillCompanies,Inc.,20018-14Irwin/McGraw-HillAnswerSolvingfor“PlanesSold”0435535=-900+.(.ld-12.5)xPlanesSoPlanesSold=63BreakEvenAnalysis©TheMcGraw-HillCompanies,Inc.,20018-15Irwin/McGraw-HillOperatingLeverageOperatingLeverage-Thedegreetowhichcostsarefixed.DegreeofOperatingLeverage(DOL)-Percentagechangeinprofitsgivena1percentchangeinsales.DOL=%changeinprofits%changeinsales©TheMcGraw-HillCompanies,Inc.,20018-16Irwin/McGraw-HillOperatingLeverageExample-Acompanyhassalesoutcomesthatrangefrom$16milto$19mil,Dependingontheeconomy.Thesameconditionscanproduceprofitsintherangefrom$550,000to$1,112,000.WhatistheDOL?DOL==5.45102.218.75©TheMcGraw-HillCompanies,Inc.,20018-17Irwin/McGraw-HillFlexibility&OptionsDecisionTrees-Diagramofsequentialdecisionsandpossibleoutcomes.DecisiontreeshelpcompaniesdeterminetheirOptionsbyshowingthevariouschoicesandoutcomes.TheOptiontoavoidalossorproduceextraprofithasvalue.TheabilitytocreateanOptionthushasvaluethatcanbeboughtorsold.©TheMcGraw-HillCompanies,Inc.,20018-18Irwin/McGraw-HillDecisionTreesNPV=0Don’ttestTest(Invest$200,000)SuccessFailurePursueprojectNPV=$2millionStopprojectNPV=0