Investment appraisal 2

... (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

... TwoŠPeriod Investment Project + B1 B2 K - Year Calculating Net Present Value NPV = -K + B1[1/(1+r1] + B2[1/(1+r1][1/(1+r2] Assume r1 = r2 = r: NPV = -K + B1[1/(1+r)] + B2[1/(1+r) ]2 IRR: Solve ... of Return, IRR = MPK - = [BC/AC] > r, hence undertake the project To solve for IRR choose rP to set BC[1/(1+rP)] - AC = ie IRR = [BC/AC] -1 Figure 2. 2 : A Country’s Inter-tempor...

Ngày tải lên: 20/11/2014, 17:52

... 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 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

... 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

Ngày tải lên: 04/10/2015, 20:07

... average past, projections… – Investment may take place over several periods Lecture III: Investment Appraisal 13 Financing & Investment Decisions • The financing and investment decisions are treated ... used Lecture III: Investment Appraisal A Project Proposal • Cash Flow: – CF1 = 1100 and CF2 = 1210 • KC = 2100 • R = 10% • Should you invest? • 2310 > 2100 Lecture III: Inve...

Ngày tải lên: 04/10/2015, 20:07

... 600,000 1. 00 -600,000 +75,000 0.9546539 71, 599.04 +10 0,000 0. 911 36 41 91, 136. 41 +15 0,000 0.8700374 13 0,505. 61 +200,000 0.8305846 16 6 ,11 6.92 + 210 ,000 0.7929209 16 6, 513 .39 +15 0,000 0.7569650 11 3,544.75 ... 23,866.35 +75,000 0. 911 36 41 68,352. 31 +85,000 0.8700374 73,953 .18 +10 0,000 0.8305846 83,058.46 +15 0,000 0.7929209 11 8,938 .10 +450,000 0.7569650 340,634...

Ngày tải lên: 04/10/2015, 20:07

... Management Decision, Vol 35, 2, pp 163-168 36 Your tutorial activities for next week During the seminar you will be expected to work on: Q2 p.187; Q1 p .22 0 (5th ed) Q2 p.179; Q2 p .20 6 (4th ed) To prepare ... Relative measure and so ignores size of initial investment2 1 Recap on investment appraisal methods  NPV is academically preferred as an investment appraisal method – it...

Ngày tải lên: 04/10/2015, 20:07

... estimated cash flows £ per year at present values are: 90.9 + 165 .3 + 75.1 + 68 .3 + 136 .6 = £ 536 .2 total over years NPV = £ 536 .2 - £450 = £86.2 The project gives 10% return, plus a surplus of ... your original investment from net cash flows that result For example, a small, internal IS program to save costs: Original investment £450 net cash inflows – Year £100 – Year 30 0 – Year...

Ngày tải lên: 04/10/2015, 20:07

... 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