Some Alternative Investment Rules参考.pptVIP

Chapter Outline 6.1 Why Use Net Present Value? 6.2 The Payback Period Rule 6.3 The Discounted Payback Period Rule 6.4 The Average Accounting Return 6.5 The Internal Rate of Return 6.6 Problems with the IRR Approach 6.7 The Profitability Index 6.8 The Practice of Capital Budgeting 6.9 Summary and Conclusions 6.1 Why Use Net Present Value? Accepting positive NPV projects benefits shareholders. NPV uses cash flows NPV uses all the cash flows of the project NPV discounts the cash flows properly The Net Present Value (NPV) Rule Net Present Value (NPV) = Total PV of future CF’s + Initial Investment