财务管理英文课件：C7-Capital Budgeting Techniques.pptVIP

Other Project Relationships Mutually Exclusive – A project whose acceptance precludes the acceptance of one or more alternative projects. Dependent – A project whose acceptance depends on the acceptance of one or more other projects. Potential Problems Under Mutual Exclusivity A. Scale of Investment B. Cash-flow Pattern C. Project Life Ranking of project proposals may create contradictory results. A. Scale Differences Compare a small (S) and a large (L) project. NET CASH FLOWS Project S Project L END OF YEAR 0 -$100 -$100,000 1 0 0 2 $400 $156,250 A. Scale Differences Calculate the PBP, IRR, NPV@10%, and PI@10%. Which project is preferred? Why? Project IRR NPV PI S 100% $ 231 3.31 L 25% $29,132 1.29 A. Scale Differences Refer to VW13E-13b.xlsx on the ‘Scale’ tab. Remember to refer to Excel spreadsheet ‘VW13E-13b.xlsx’ and the ‘Scale’ tab. B. Cash Flow Pattern Let us compare a decreasing cash-flow (D) project and an increasing cash-flow (I) project. NET CASH FLOWS Project D Project I END OF YEAR 0 -$1,200 -$1,200 1 1,000 100 2 500 600 3 100 1,080 D 23% $198 1.17 I 17% $198 1.17 Cash Flow Pattern Calculate the IRR, NPV@10%, and PI@10%. Which project is preferred? Project IRR NPV PI Examine NPV Profiles Discount Rate (%) 0 5 10 15 20 25 -200 0 200 400 600 IRR NPV@10% Plot NPV for each project at various discount rates. Net Present Value ($)