Chp005.pptVIP

Topics Covered A Review of The Basics NPV and its Competitors The Payback Period The Book Rate of Return Internal Rate of Return Capital Rationing NPV and Cash Transfers Every possible method for evaluating projects impacts the flow of cash about the company as follows. CFO Decision Tools Key Features of the NPV First, the NPV rule recognizes that a dollar today is worth more than a dollar tomorrow. Second, NPV depends solely on the forecasted cash flows from the project and the opportunity cost of capital. Third, because NPV are all measured in today’s dollars, you can add them up. Book Rate