金融學概论讲义(北大光华管理--學院)lecture.docVIP

Principles of Finance Lecture 03 How to Analyze Investment Projects Objectives To show how to use discounted cash flow analysis to make decisions such as Whether to enter a new line of business Whether to invest in equipment to reduce costs Contents ( The NPV rule ( Estimating a project’s cash flows ( Cost of capital ( Sensitivity Analysis ( Cost-reducing projects ( Projects with different lives ( Mutually exclusive projects ( Inflation and capital budgeting The Nature of Project Analysis ( Basic unit of analysis ( Individual investment project ( The criterion used Find the present value of all future cash flows, and subtract the initial investment to obtain the net present value (NPV) Invest in proposed project with positive NPV The wealth of the firm’s shareholders will increase by NPV NPV of a Project Discount rate (cost of capital) 10% Year Cash Flow PV Cum_PV 0 (1000 (1000 (1000 1 450 409 (591 2 350 289 (302 3 250 188 (114 4 150 102 (11 5 50 31 20 Project NPV 20 Decision: Accept the project NPV of a Project Discount rate (cost of capital) 15% Year Cash Flow PV Cum_PV 0 (1000 (1000 (1000 1 450 391 (609 2 350 265 (344 3 250 164 (180 4 150 86 (94 5 50 25 (69 Project NPV (69 Decision: Reject the project NPV of a Project Discount rate (cost of capital) 11.04% Year Cash Flow PV Cum_PV 0 (1000 (1000 (1000 1 450 405 (595 2 350 284 (311 3 250 183 (128 4 150 99 (30 5 50 30 0 Project NPV 0 Where Do Investment Ideas Come From? ( Monitor existing and customer needs ( Monitor existing and potential technological capacity of the firm ( Monitor main competitors’ marketing, investment, patent, and technical recruitment ( Monitor production and distribution functions for revenue enhancement/cost savings ( Reward employees for innovative ideas Examples of Investment Ideas ( Launch a new line of business ( Replace existing equipment with more efficient one ( Close a loss making subsidiary Estimating A Project’s Cash Flows ( Estimate