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chap_08 - Chapter 8 NET PRESENT VALUE AND OTHER INVESTMENT...

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Chapter 8 NET PRESENT VALUE AND OTHER INVESTMENT CRITERIA SLIDES 8.1 Key Concepts and Skills 8.2 Chapter Outline 8.3 Good Decision Criteria 8.4 Project Example Information 8.5 Net Present Value 8.6 NPV Decision Rule 8.7 Computing NPV for the Project 8.8 Decision Criteria Test - NPV 8.9 Calculating NPVs with a Spreadsheet 8.10 Payback Period 8.11 Computing Payback For The Project 8.12 Decision Criteria Test - Payback 8.13 Advantages and Disadvantages of Payback 8.14 Average Accounting Return 8.15 Computing AAR For The Project 8.16 Decision Criteria Test - AAR 8.17 Advantages and Disadvantages of AAR 8.18 Internal Rate of Return 8.19 IRR – Definition and Decision Rule 8.20 Computing IRR For The Project 8.21 NPV Profile For The Project 8.22 Decision Criteria Test - IRR 8.23 Advantages of IRR 8.24 Summary of Decisions For The Project 8.25 Calculating IRRs With A Spreadsheet 8.26 NPV Vs. IRR 8.27 IRR and Non-conventional Cash Flows 8.28 Another Example – Non-conventional Cash Flows 8.29 NPV Profile 8.30 Summary of Decision Rules 8.31 IRR and Mutually Exclusive Projects 8.32 Example With Mutually Exclusive Projects 8.33 NPV Profiles 8.34 Conflicts Between NPV and IRR 8.35 Profitability Index 8.36 Advantages and Disadvantages of Profitability Index 8.37 Capital Budgeting In Practice 8.38 Quick Quiz
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A-94 NET PRESENT VALUE AND OTHER INVESTMENT CRITERIA CHAPTER WEB SITES Web sites may be referenced more than once in a chapter. This table just includes the section for the first reference. Chapter Section Web Address 8.1 www.missouribusiness.net www.wheatworks.com What’s On the Web? www.datadynamica.com CHAPTER ORGANIZATION 8.1 Net Present Value The Basic Idea Estimating Net Present Value 8.2 The Payback Rule Defining the Rule Analyzing the Rule Redeeming Qualities of the Rule Summary of the Rule 8.3 The Average Accounting Return 8.4 The Internal Rate of Return Problems with the IRR Redeeming Qualities of the IRR 8.5 The Profitability Index 8.6 The Practice of Capital Budgeting ANNOTATED CHAPTER OUTLINE Slide 8.1 Key Concepts and Skills Slide 8.2 Chapter Outline Lecture Tip, page 224: A logical prerequisite to the analysis of investment opportunities is the creation of investment opportunities. Unlike the field of investments, where the analyst more or less takes the investment opportunity set as a given, the field of capital budgeting relies on the work of people in the areas of engineering, research and development, information technology and others for the creation of investment opportunities. As such, it is important to suggest that students keep in mind the importance of creativity in this area, as well as the importance of analytical techniques.
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CHAPTER 8 A-95 8.1. Net Present Value .A The Basic Idea Net present value – the difference between the market value of an investment and its cost. While estimating cost is usually straightforward, finding the market value of assets can be tricky. The principle is to find the market price of comparables or substitutes.
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