Ch 9 - Lectures March 31 and half Apr 2 - Section 3 Capital...

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3/28/2015 1 1-1 Mar 24 & 26 “The Inside Job” Mar 31 & Apr 2 Chapters 9 and 10 (1/2) Apr 7 & 9 - Break Apr 14 & 16 Chapter 10 (1/2) & Chapter 12 (1/2) Apr 21 & 23 Chapter 12 (1/2) & Chapter 13 (1/2) Apr 28 & 30 Chapter 13 (1/2) and Chapter 14 (1/2) May 5 Chapter 14 (1/2) May 7 Review Week of May 14 3:15 Exam #3 Section 3 Capital Budgeting Source: Fundamentals of Corporate Finance by Ross, Westerfield & Jordan, 10th Edition, 2013 1-2 A. Net Present Value B. The Payback Rule C. The Discounted Payback D. The Average Accounting Return E. The Internal Rate of Return F. The Profitability Index G. The Practice of Capital Budgeting Chapter Nine Net Present Value and Other Investment Criteria Source: Fundamentals of Corporate Finance by Ross, Westerfield & Jordan, 10th Edition, 2013
3/28/2015 2 1-3 In Chapter 1 we learned the goal of financial management is to increase the value of the company’s stock. Now we need to learn how to tell if a project will help achieve this goal Capital investment what fixed assets should we buy? Decision to commit a company’s assets to support certain product lines. Strategic asset allocation. The fixed assets define the business of the company Will learn techniques used to analyze potential business ventures Capital Budgeting Source: Fundamentals of Corporate Finance by Ross, Westerfield & Jordan, 10th Edition, 2013 1-4 Capital budgeting decisions involve input from many areas of the company: Engineering (to identify technologies) Research & Development (to develop new technologies) Information Technology (identify what technologies would be compatible with existing infrastructure) Procurement organizations (identify sourcing) Manufacturing Engineering (determine if / how new products might be produced) Capital Budgeting Source: Fundamentals of Corporate Finance by Ross, Westerfield & Jordan, 10th Edition, 2013