管理会计16.pptVIP

Capital Expenditure Decisions Discounted-Cash-Flow Analysis Net-Present-Value Method Prepare a table showing cash flows for each year, Calculate the present value of each cash flow using a discount rate, Compute net present value, If the net present value NPV is positive, accept the investment proposal. Otherwise, reject it. Internal-Rate-of-Return Method The internal rate of return is the true economic return earned by the asset over its life. The internal rate of return is computed by finding the discount rate that will cause the net present value of a project to be zero. Comparing the NPV and IRR Methods Net Present Value The cost of capital is used as the actual discount rate. Any project with a negative net present value is rejected. Internal Rate of Return The cost of capital is compared to the internal rate of return on a project. To be acceptable, a project’s rate of return must be greater than the cost of capital. Comparing the NPV and IRR Methods The net present value method has the following advantages over the internal rate of return method . . . Easier to use. Easier to adjust for risk. Provides more usableinformation. Assumptions Underlying Discounted-Cash-Flow Analysis Income Taxes and Capital Budgeting Cash flows from an investment proposal affect the company’s profit and its income tax liability. After-Tax Cash Flows Investment in Working Capital Some investment proposals require additional outlays for working capital such as increases in cash, accounts receivable, and inventory. Internal Rate of Return IRR The interest rate that equates the present value of inflows and outflows from an investment project. Alternative Methods for Making Investment Decisions Payback Method Accounting-Rate-of-Return Method Discounted-cash-flow method focuses on cash flows and the time value of money. Accounting-rate-of-return method focuses on the incremental accounting income that results from a project. Capital Budgeting Practices Justification of Investmen