L_15_ - Lecture Outline Lecture 15 Chapter 11: Project...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
Lecture Outline Lecture 15 Chapter 11: Project Analysis and Evaluation Lecture Organization Operating Leverage Additional Considerations in Capital Budgeting
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Capital Budgeting Questions Projected versus Actual Cash Flows
Background image of page 2
Capital Budgeting Questions Forecasting Risk Forecasting risk In order to develop reliable cash flow estimates for the projects we have to understand (among other things)
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Quantity Analysis How sensitive the cash flows to changes in quantity?
Background image of page 4
OPERATING LEVERAGE Operating leverage Operating leverage
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Example: comparison two alternative cost structures for project A and B; Project A: FC (Proj. A) =$10,000; VC (Proj. A) = $6, Unit Price=$10 Project B: FC (Proj. B) =$25,000; VC (Proj. B) =$3, Unit Price=$10 consider what minimum quantity of sales Q* would be required to favor one project over another.
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/22/2011 for the course FINA 365 taught by Professor Koch during the Spring '08 term at South Carolina.

Page1 / 15

L_15_ - Lecture Outline Lecture 15 Chapter 11: Project...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online