CAPITAL BUDGETING INVESTMENT APPRAISAL METHODS

... Concept of Capital Budgeting  Capital Expenditure Budget  Importance of Capital Budgeting  Rational of Capital Expenditure  Kinds of Capital Investment Proposals  Factors affecting Investment ... affecting Investment Decision  Investment Appraisal Methods  Capital Rationing Concept of Capital Budgeting  Finance Manager is concerned with Planning and Fin...

Ngày tải lên: 04/10/2015, 19:55

... the concept of capital budgeting, and sets out the structure of the book • The important points are: Capital budgeting is the most significant financial activity of the firm Capital budgeting determines ... application of various techniques, such as the Delphi method:Ch Aspects of Capital Budgeting Capital Budgeting requires: Application of time value of mon...

Ngày tải lên: 31/10/2014, 14:56

... Estimated average investment X 100 % The others include: ARR = Estimated total profits X 100 % Estimated initial investment ARR = Estimated average profits X 100 % Estimated initial investment There ... repayments from an investment, which will provide the money for other investment THE PAY BACK METHOD The payback is defined as the time it takes the cash inflow from a capital inves...

Ngày tải lên: 04/10/2015, 20:07

... the technical and economic feasibility of the project, cash flows etc Investment Appraisal Process Stages: decide which one to undertake authorisation and implementation review and monitor: learn ... Diversification for risk reduction Need for Investment Appraisal Large amount of resources are involved and wrong decisions could be costly Difficult and expensive to reverse...

Ngày tải lên: 04/10/2015, 19:55

... biểu diễn NPV dự án A r % TIÊU CHUẨN NPV Đối với dự án đầu tư độc lập NPV > 0: Chấp nhận dự án  NPV < 0: Loại bỏ dự án  NPV = 0: Tùy quan điểm nhà đầu tư   Đối với dự án đầu tư loại trừ lẫn ... 50000$ - 36.000$ 22 TIÊU CHUẨN IRR DỰ ÁN KHÔNG CÓ IRR 23 TIÊU CHUẨN IRR DỰ ÁN KHÔNG CÓ IRR Năm Dự án B 1500$ - 3000$ 2250$ -750$ 300$ 24 TIÊU CHUẨN IRR DỰ Á...

Ngày tải lên: 21/11/2014, 11:13

... Session Capital Investment Appraisal • By the end of today’s session(s), you should be able to: – Understand the context of investment appraisal decisions – Evaluate capital projects ... Average capital invested Where the average annual profit is the total profit for the whole period (after depreciation) divided by the life of the investment in years; and The average capital...

Ngày tải lên: 04/10/2015, 19:55

... Jones, 20 02, p 4 52 Business Accounting The capital investment decision  Capital investment appraisal techniques are used for making decisions concerning the investment of large amount of capital ... Exercise Capital investment decisions Business Accounting Exercise Capital investment decisions Business Accounting Solution Capital investment decisions Business Ac...

Ngày tải lên: 04/10/2015, 19:56

... maximize the firm’s wealth Basic techniques of making capital investment appraisal for evaluating proposed capital investment projects Investment appraisal methods Considering the time value of money ... = Average investment cost Total profit Average net profit per year = No of life of the project Initial investment Average investment cost = 48 Acceptance criterion In eval...

Ngày tải lên: 04/10/2015, 19:56

... Capital investment appraisal Capital investment involves the sacrifice of current funds in order to obtain the benefit ... required Capital investment is long-term and the recoupment of investment may involve a significant period of time Factors to consider in assessing capital projects The size of the investment ... regarding the projected cash flows The working capital...

Ngày tải lên: 04/10/2015, 19:56

... and thorough 34 List three potential problems with using IRR in making capital budgeting decisions 35 Given the advantages of NPV over all other capital budgeting tools why would you ever want ... property for $1 million at the end of year The company's cost of capital is 12 percent, and it used the MIRR criterion for capital budgeting decisions What is the project's MIRR? (MIRR...

Ngày tải lên: 03/05/2013, 22:59

... related sources of risk when estimating the required rate of return 3.3 The level of the required rate of return Table investigates the required rate of return or weighted average cost of capital ... 17 and 22 INVESTMENT EVALUATION METHODS AND TABLE The investment projects’ required rate of return The respondents were asked to provide a method...

Ngày tải lên: 17/12/2013, 15:08

... companies These examples illustrate capital asset decisions Financial managers, assisted by cost accountants, are responsible for capital budgeting Capital budgeting is “a process for evaluating ... proposed capital projects Several of these techniques are based on an analysis of the amounts and timing of project cash flows USE OF CASH FLOWS IN CAPITAL BUDGETING Why most capi...

Ngày tải lên: 18/12/2013, 09:10

... (international business and management) II- The method of investment appraisal which may be applied to evaluated and rank potential investment opportunities and their relative merits and limitations In ... places together with the potential effects of a takeover Then, I will give four method of investment appraisal to evaluated...

Ngày tải lên: 17/02/2014, 13:02

... internal rate of return 18 INVESTMENT APPRAISAL ‘‘Forecasts can be injurious to your wealth.’’ Dean LeBaron, b.1933, investment manager The final step of investment appraisal is the financial calculation ... cultures.’’ Investment appraisal and return on investment calculations have cultural differences across the globe International companies need to build this into their inve...

Ngày tải lên: 18/02/2014, 07:20

... VALUE OF THE FIRM D WOULD THE NPVs CHANGE IF THE COST OF CAPITAL CHANGED? ANSWER: THE NPV OF A PROJECT IS DEPENDENT ON THE COST OF CAPITAL USED THUS, IF THE COST OF CAPITAL CHANGED, THE NPV OF EACH ... GENERAL LEVEL OF INTEREST RATES THIS IS CALLED THE PROJECT COST OF CAPITAL IN CAPITAL BUDGETING FIND (A) THE PV OF THE EXPECTED CASH FLOWS AND/OR (B) THE ASSET’S R...

Ngày tải lên: 01/07/2014, 21:28