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Unformatted text preview: Problem Day: NPV, IRR, PI, EAA Housekeeping Items POW Quiz this week due Thursday at 5pm POW Reviews this Thu at 5pm and Fri at 8am Ch. 12 Reading Quiz due Monday morning at 8am Come to lab hours if you want to see your scantron and review your test Course email: Busm301@gmail.com Todays Agenda NPV IRR EAA Profitability Index (PI) Tales of a Financial Analyst The Importance of Precision Sell 10 bps of Evergreen at $13.42, Work OTD 15% in line w volume Buy 25 bps of Muhibbah at $15.37, 25% Straight line w volume Buy 10 bps of Nippon Steel, Market order Sell 20 bps of Nikon at $27.25, Work OTD 25% in line w volume Sell 10 bps of Nippon Soda, Work OTD 20% in line w volume Sell 10 bps of Motorola at $35.42, Work OTD 15% in line w volume Buy 25 bps of Avi Tech at $11.05, 25% Straight line w volume Buy 20 bps of China Health, Market order Sell 20 bps of China Haida at $42.25, Work OTD 25% in line w volume Sell 10 bps of Japan Foods, Work OTD 20% in line w volume Sell 10 bps of Indosat at $5.03, Work OTD 15% in line w volume Buy 25 bps of Bank Negara at $15.37, 25% Straight line w volume Buy 10 bps of Mitsubishi Bank, Market order Sell 20 bps of Mitsubishi Trust at $27.25, Work OTD 25% in line w volume Sell 10 bps of Acer, Work OTD 20% in line w volume Payback Period This thing is ridiculously easy. Thats because Payback Period is ridiculously easy. What is the payback period for a $25,000 project that is expected to return $8,000 for the first two years and $4,000 for years 3 through 7? a. 4 years b. 5 years c. 4.25 years d. 4.33 years Payback Period What is the payback period for a $25,000 project that is expected to return $8,000 for the first two years and $4,000 for years 3 through 7? Cash Flow Cumulative Payback 1st year 8,000 8,000 2nd year 8,000 16,000 3rd year 4,000 20,000 4th year 4,000 24,000 5th year 4,000 28,000 6th year 4,000 32,000 7th year 4,000 36,000 Payback Period What is the payback period for a $25,000 project that is expected to return $8,000 for the first two years and $4,000 for years 3 through 7? a. 4 years b. 5 years c. 4.25 years d. 4.33 years NPV Do we want a high NPV? o Of course Does the NPV need to be bigger than the Initial Outlay? o Of course not If the NPV is positive, what do we do with the proposed project? o Accept If the NPV is negative, what do we do with the proposed project? o Reject Brain Exercise The _____________ is equal to the present value of inflows less the present value of outflows, discounted at the cost of capital....
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This note was uploaded on 11/09/2011 for the course BUS M 301 taught by Professor Jimbrau during the Fall '11 term at BYU.
 Fall '11
 JimBrau
 Finance

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