chap008Using Discounted Cash Flow Analysis to Make Investment Decisions(财务管理,Matthew Will)概要1.ppt

Topics Covered Identifying Cash Flows Discounted Cash Flows, Not Profits Incremental Cash Flows Treatment of Inflation Separate Investment Financing Decisions Calculating Cash Flows Example: Blooper Industries Cash Flow vs. Accounting Income Discount actual cash flows Using accounting income, rather than cash flow, could lead to erroneous decisions. Incremental Cash Flows Discount incremental cash flows 增量現金流量 Include All Indirect Effects Forget Sunk Costs Include Opportunity Costs Recognize the Investment in Working Capital 營運資金 Beware of Allocated Overhead Costs 分攤經常性成本 Incremental Cash Flows IMPORTANT Ask yourself this question Would the cash flow still exist if the project does not exist? (Incremental Cash Flow 0) Inflation INFLATION RULE Be consistent in how you handle inflation!! Use nominal interest rates to discount nominal cash flows. Use real interest rates to discount real cash flows. You will get the same results, whether you use nominal or real figures Inflation Example You own a lease that will cost you $8,000 next year, increasing at 3% a year (the forecasted inflation rate) for 3 additional years (4 years total). If discount rates are 10% what is the present value cost of the lease? Inflation Example - nominal figures Inflation Example - real figures Separation of Investment  Financing Decisions When valuing a project, ignore how the project is financed. Following the logic from incremental analysis ask yourself the following question: Is the project existence dependent on the financing? If no, you must separate financing and investment decisions. Blooper Industries Blooper Industries Cash Flow From Operations (,000s) Blooper Industries Net Cash Flow (entire project) (,000s) Copyright ? 2007 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin 8- * Chapter 8 Fundamentals of Corporate Finance Fifth Edition Slides by Matthew Will McGraw-Hill/Irwin Copyright ? 2007 by The McGraw-Hill Companies, Inc. All rights reserv