MngrlEcon1415-05-07-2014 (1) - (2 cost o± equity(3...

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Managerial Economics Fall 2014 Dr. Soon Paik Chapter 14 Capital budgeting (05/07/2014) 1. capital budgeting = 2. Capital Budgeting process (1) capital demand evaluation (1) net present value (2) benefit/cost ratio = profitability index (3) internal rate of return Project A project B PVNet Cash Flow Initial cost NPV Profitability index IRR 3. Cost of Capital (1) cost of debt
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Unformatted text preview: (2) cost o± equity (3) composite cost o± capital Chapter 15 Government RegulaTons * manager’s task: 1. Market Failures and RegulaTons (1) market power (2) asymmetric informaTon- sellers vs. buyers (3) externaliTes- negaTve- posiTve (4) non-private goods- natural monopoly- common resources- public goods...
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