台湾大学财务廖咸兴ProjectAnalysisTraining.pptx

Irwin/McGraw-Hill Chapter 8 Fundamentals of Corporate Finance Third Edition Project Analysis Brealey Myers Marcus slides by Matthew Will Topics Covered How Firms Organize Their Investment Process Some “What If” Questions Sensitivity Analysis Break Even Analysis Flexibility in Capital Budgeting Decision Trees Options Capital Budgeting Process Capital Budget - The list of planned investment projects. The Decision Process 1 - Develop and rank all investment projects 2 - Authorize projects based on: Govt regulation Production efficiency Capacity requirements NPV Capital Budgeting Process Capital Budgeting Problems Consistent forecasts Conflict of interest Forecast bias Selection criteria (NPV and others) How To Handle Uncertainty Sensitivity Analysis - Analysis of the effects of changes in sales, costs, etc. on a project. Scenario Analysis - Project analysis given a particular combination of assumptions. Simulation Analysis - Estimation of the probabilities of different possible outcomes. Break Even Analysis - Analysis of the level of sales (or other variable) at which the company breaks even. Sensitivity Analysis Example Given the expected cash flow forecasts listed on the next slide, determine the NPV of the project given changes in the cash flow components using an 8% cost of capital. Assume that all variables remain constant, except the one you are changing. Sensitivity Analysis Example - continued NPV= $478 Sensitivity Analysis Example - continued Possible Outcomes Sensitivity Analysis Example - continued NPV Calculations for Pessimistic Investment Scenario NPV= ($121) Sensitivity Analysis Example - continued NPV Possibilities Break Even Analysis Example Given the forecasted data on the next slide, determine the number of planes that the company must produce in order to break even, on an NPV basis. The company’s cost of capital is 10%. Break Even Analysis Break Even Analysis Answer The break even point, is the # of Planes Sold that generates a NP