财务管理基 financial management 清华大学出版社pp13.pptVIP

NPV Profile – Multiple IRRs Discount Rate (%) 0 40 80 120 160 200 Net Present Value ($000s) Multiple IRRs at k = 12.95% and 191.15% 75 50 25 0 –100 NPV Profile – Multiple IRRs Hint: Your calculator will only find ONE IRR – even if there are multiple IRRs. It will give you the lowest IRR. In this case, 12.95%. Net Present Value Profile Discount Rate (%) 0 3 6 9 12 15 IRR NPV@13% Sum of CF’s Plot NPV for each discount rate. Three of these points are easy now! Net Present Value $000s 15 10 5 0 -4 Creating NPV Profiles Using the Calculator Hint: As long as you do not “clear” the cash flows from the registry, simply start at Step 15 and enter a different discount rate. Each resulting NPV will provide a “point” for your NPV Profile! Profitability Index (PI) PI is the ratio of the present value of a project’s future net cash flows to the project’s initial cash outflow. CF1 CF2 CFn (1+k)1 (1+k)2 (1+k)n + . . . + + ICO PI = PI = 1 + [ NPV / ICO ] OR Method #2: Method #1: PI Acceptance Criterion No! The PI is less than 1.00. This means that the project is not profitable. [Reject as PI 1.00 ] PI = $38,572 / $40,000 = .9643 (Method #1, previous slide) Should this project be accepted? PI Strengths and Weaknesses Strengths: Same as NPV Allows comparison of different scale projects Weaknesses: Same as NPV Provides only relative profitability Potential Ranking Problems Evaluation Summary Basket Wonders Independent Project Project Evaluation: Remember Chapter 12 ‘New Asset’ project? We will start with the cash flows of the project and also calculate the cumulative cash flow values. We can use Excel functions / approaches to calculate each of the following methods from the above cash flows. Other Project Relationships Mutually Exclusive – A project whose acceptance precludes the acceptance of one or more alternative p