财务管理第九章课件

Chapter9NetPresentValueandOtherInvestmentCriteriaMcGraw-Hill/IrwinCopyright©2013byTheMcGraw-HillCompanies,Inc.Allrightsreserved.KeyConceptsandSkills•Beabletocomputepaybackanddiscountedpaybackandunderstandtheirshortcomings•Understandaccountingratesofreturnandtheirshortcomings•Beabletocomputeinternalratesofreturn(standardandmodified)andunderstandtheirstrengthsandweaknesses•Beabletocomputethenetpresentvalueandunderstandwhyitisthebestdecisioncriterion•Beabletocomputetheprofitabilityindexandunderstanditsrelationtonetpresentvalue9-2ChapterOutline•NetPresentValue•ThePaybackRule•TheDiscountedPayback•TheAverageAccountingReturn•TheInternalRateofReturn•TheProfitabilityIndex•ThePracticeofCapitalBudgeting9-3GoodDecisionCriteria•Weneedtoaskourselvesthefollowingquestionswhenevaluatingcapitalbudgetingdecisionrules:Doesthedecisionruleadjustforthetimevalueofmoney?Doesthedecisionruleadjustforrisk?Doesthedecisionruleprovideinformationonwhetherwearecreatingvalueforthefirm?9-4NetPresentValue•Thedifferencebetweenthemarketvalueofaprojectanditscost•Howmuchvalueiscreatedfromundertakinganinvestment?Thefirststepistoestimatetheexpectedfuturecashflows.Thesecondstepistoestimatetherequiredreturnforprojectsofthisrisklevel.Thethirdstepistofindthepresentvalueofthecashflowsandsubtracttheinitialinvestment.9-5ProjectExampleInformation•Youarereviewinganewprojectandhaveestimatedthefollowingcashflows:Year0:CF=-165,000Year1:CF=63,120;NI=13,620Year2:CF=70,800;NI=3,300Year3:CF=91,080;NI=29,100AverageBookValue=72,000•Yourrequiredreturnforassetsofthisrisklevelis12%.9-6NPV–DecisionRule•IftheNPVispositive,accepttheproject•ApositiveNPVmeansthattheprojectisexpectedtoaddvaluetothefirmandwillthereforeincreasethewealthoftheowners.•Sinceourgoalistoincreaseownerwealth,NPVisadirectmeasureofhowwellthisprojectwillmeetourgoal.9-7ComputingNPVfortheProject•Usingtheformulas:NPV=-165,000+63,120/(1.12)+70,800/(1.12)2+91,080/(1.12)3=12,627.41•Usingthecalculator:CF0=-165,000;C01=63,120;F01=1;C02=70,800;F02=1;C03=91,080;F03=1;NPV;I=12;CPTNPV=12,627.41•Doweacceptorrejecttheproject?9-8DecisionCriteriaTest-NPV•DoestheNPVruleaccountforthetimevalueofmoney?•DoestheNPVruleaccountfortheriskofthecashflows?•DoestheNPVruleprovideanindicationabouttheincreaseinvalue?•ShouldweconsidertheNPVruleforourprimarydecisionrule?9-9CalculatingNPVswithaSpreadsheet•SpreadsheetsareanexcellentwaytocomputeNPVs,especiallywhenyouhavetocomputethecashflowsaswell.•UsingtheNPVfunctionThefirstcomponentistherequiredreturnenteredasadecimalThesecondcomponentistherangeofcashflowsbeginningwithyear1SubtracttheinitialinvestmentaftercomputingtheNPV9-10PaybackPeriod•Howlongdoesittaketogettheinitialcostbackinanominalsense?•ComputationEstimatethecashflowsSubtractthefuturecashflowsfromtheinitialcostuntiltheinitialinvestmenthasbeenrecovered•DecisionRule–Acceptifthepaybackperiodislessthansomepresetlimit9-11ComputingPayback•Assumewewillaccepttheprojectifitpaysbackwithintwoyears.Year1:165,000–63,120=101,880stilltorecoverYear2:101,880–70,800=31,080stilltorecoverYear3:31,080–91,080=-60,000projectpaysbackinyear3•Doweacceptorrejecttheproject?9-12DecisionCriteriaTest-Payback•Doesthepaybackruleaccountforthetimevalueofmoney?•Doesthepaybackruleaccountfortheriskofthecashflows?•Doesthepaybackruleprovideanindicationabouttheincreaseinvalue?•Shouldweconsiderthepaybackruleforourprimarydecisionrule?9-13AdvantagesandDisadvantagesofPayback•AdvantagesEasytounderstandAdjustsforuncertaintyoflatercashflowsBiasedtowardliquidity•DisadvantagesIgnoresthetimevalueofmoneyRequiresanarbitrarycutoffpointIgnorescashflowsbeyondthecutoffdateBiasedagainstlong-termprojects,suchasresearchanddevelopment,andnewprojects9-14DiscountedPaybackPeriod•Computethepresentvalueofeachcashflowandthendeterminehowlongittakestopaybackonadiscountedbasis•Comparetoaspecifiedrequiredperiod•DecisionRule:Accepttheprojectifitpaysbackonadiscountedbasiswithinthespecifiedtime9-15ComputingDiscountedPayback•Assumewewillaccepttheprojectifitpaysbackonadiscountedbasisin2years.•ComputethePVforeachcashflowanddeterminethepaybackperiodusingdiscountedcashflowsYear1:165,000–63,120/1.121=108,643Year2:108,643–70,800/1.122=52,202Year3:52,202–91,080/1.123=-12,627projectpaysbackinyear3•Doweacceptorrejecttheproject?9-16DecisionCriteriaTest–DiscountedPayback•Doesthediscountedpaybackruleaccountforthetimevalueofmoney?•Doesthediscountedpaybackruleaccountfortheriskofthecashflows?•Doesthediscountedpaybackruleprovideanindicationabouttheincreaseinvalue?•Shouldweconsiderthediscountedpaybackruleforourprimarydecisionrule?9-17AdvantagesandDisadvantagesofDiscountedPayback•AdvantagesIncludestimevalueofmoneyEasytounderstandDoesnotacceptnegativeestimatedNPVinvestmentswhenallfuturecashflowsarepositiveBiasedtowardsliquidity•DisadvantagesMayrejectpositiveNPVinvestmentsRequiresanarbitrarycutoffpointIgnorescashflowsbeyondthecutoffpointBiasedagainstlong-termprojects,suchasR&Dandnewproducts9-18AverageAccountingReturn•Therearemanydifferentdefinitionsforaverageaccountingreturn•Theoneusedi