财务管理ch06资本预算.pptxVIP

Project Evaluation: Alternative Methods Payback Period (PBP投资回收期) Internal Rate of Return (IRR内含报酬率) Net Present Value (NPV净现值) Profitability Index (PI获利指数)Proposed Project DataJulie Miller is evaluating a new project for her firm, Basket Wonders (BW). She has determined that the after-tax cash flows for the project will be $10,000; $12,000; $15,000; $10,000; and $7,000, respectively, for each of the Years 1 through 5. The initial cash outlay will be $40,000.Independent ProjectFor this project, assume that it is independent of any other potential projects that Basket Wonders may undertake.Independent -- A project whose acceptance (or rejection) does not prevent the acceptance of other projects under consideration.Payback Period (PBP)0 1 2 3 4 5 -40 K 10 K 12 K 15 K 10 K 7 KPBP is the period of time required for the cumulative expected cash flows from an investment project to equal the initial cash outflow.Payback Solution (#1)(a)0 1 23 4 5(-b)(d) -40 K10 K 12 K 15 K 10 K7 K(c)10 K 22 K37 K47 K 54 KCumulativeInflowsPBP = a + ( b - c ) / d = 3 + (40 - 37) / 10 = 3 + (3) / 10 = 3.3 YearsPayback Solution (#2)0 1 23 4 5 -40 K 10 K 12 K 15 K 10 K7 K-40 K -30 K -18 K -3 K 7 K 14 KPBP = 3 + ( 3K ) / 10K = 3.3 YearsNote: Take absolute value of last negative cumulative cash flow value.CumulativeCash FlowsPBP Acceptance CriterionThe management of Basket Wonders has set a maximum PBP of 3.5 years for projects of this type.Should this project be accepted?Yes! The firm will receive back the initial cash outlay in less than 3.5 years. [3.3 Years 3.5 Year Max.]PBP Strengthsand WeaknessesStrengths: Easy to use and understand Can be used as a measure of liquidityWeaknesses: Does not account f