2.1 Stud%20Week%207%20Lect%201%20Capital%20Proj%20Dec%20Rules%20and%20classifications.ppt

2.1 Stud%20Week%207%20Lect%201%20Capital%20Proj%20Dec%20Rules%20and%20classifications.ppt

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    Capital Budgeting  Methods  (Cont) Week 7 Lect 1
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    Capital Budgeting The process of planning investments in assets  whose cash flows are expected to extend  beyond one year
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    Importance of Capital Budgeting Long term impact Timing Substantial expenditures for which funds must  be raised (either internally, externally, or both)
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    1) Independent projects projects whose cash flows are __________ by the  acceptance or rejection of other projects Project Classifications
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    2) Mutually exclusive projects a set of projects where the acceptance of one project  means the others _________________ Project Classifications
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    Project Classifications 3) Replacement decisions decisions to determine whether to purchase capital  assets to _______________________  _____________________________________
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    Project Classifications 3) Replacement analysis Must consider cash flow from ____________    _________________________ in the  decision Cash flows from the new asset ___________ of the  cash flows from ________________.
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    Project Classifications 4) Expansion decisions decisions to determine whether to _______ capital  projects and _________________ assets to  ___________ existing operations
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    Project Classifications 4) Expansion decisions _________ investment outlays required Estimate the ________________________    _____________________________ Consider _________cash flows.
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    Capital Budgeting Evaluation  Methods 1. Payback 2. Net present value (NPV) 3. Internal rate of return (IRR) Today 1. Comparison between NPV and IRR 2. Modified Internal rate of return (MIRR)  3. Profitability Index (PI)
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This note was uploaded on 12/23/2009 for the course BCOM FINC 201 taught by Professor Debrak.reed during the Spring '09 term at Canterbury.

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2.1 Stud%20Week%207%20Lect%201%20Capital%20Proj%20Dec%20Rules%20and%20classifications.ppt

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