BUAD306_8_30June2008

BUAD306_8_30June2008 - 8. NPV method BUAD 306 Summer 2008...

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8. NPV method BUAD 306 Summer 2008
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Three decisions Financing : how to slice the pizza Investment : take a (given) project or not Payout : how much pay out or retain Decision criteria: for what ?
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A new project Can provide an opportunity to grow Real “option” Always good? Good for what? When is it bad ?
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Bored of coffee? Add new business? LUNCH Need more $$. Would it be PROFITABLE ? Your choice? Remember me?
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Investment decisions Analyze proftability How much needed < How much earned Net present value (NPV) method (How much earned - How much needed) > 0 Remember me?
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Why care about NPV? Roughly speaking, (How much earned - How much needed) = Net present value (NPV) If NPV > 0 ..., then take the project! Pizza gets larger ! Good for whom?
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Apple computer http://www.youtube.com/watch?v=EtsvrUqW7_Q&feature=related
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This note was uploaded on 07/14/2008 for the course BUAD 306 taught by Professor Selvili during the Summer '07 term at USC.

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BUAD306_8_30June2008 - 8. NPV method BUAD 306 Summer 2008...

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