L_10_ - Lecture 10 Net Present Value and Other Investment...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
Lecture 10 Net Present Value and Other Investment Criteria Lecture Organization Annuity and perpetuity Net Present Value The Payback Rule The Discounted Payback IRR
Background image of page 1

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

View Full DocumentRight Arrow Icon
Example: Perpetuity Calculations What is the present value of cash flow of $1000 per year forever . This is called a perpetuity PV of perpetuity is easy to calculate: PV = PV= 0 $1,000 $1,000 $1,000 Year, t Perpetuity ….. $1,000
Background image of page 2
Growing Perpetuity Calculations What is the present value of cash flow of the growing perpetuity PV of perpetuity is easy to calculate: PV of Growing Perpetuity = PV= 0 $1,000 $1,000(1+g) $1,000*(1+g) 2 Year, t ….. $1,000(1+g) 3
Background image of page 3

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

View Full DocumentRight Arrow Icon
The Capital Budgeting Decisions: "What Assets Should We Buy?" “What investment Should We Choose? Is given investment project worthwhile to undertake? There are several approaches (rules) to answer these Questions: Net Present Value Payback Rule (Ordinary and Discounted Payback) Profitability Index Internal Rate of Return
Background image of page 4
The NPV Rule Net present value Net present value rule
Background image of page 5

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

View Full DocumentRight Arrow Icon
Image of page 6
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 / 24

L_10_ - Lecture 10 Net Present Value and Other Investment...

This preview shows document pages 1 - 6. Sign up to view the full document.

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