公司理財(cái)chap7-文庫(kù)吧資料
2025-01-04 22:00本頁(yè)面
【正文】 g Criteria: Set by management,Consider the following three projects available to a firm:,Please calculate the payback period for each project.,Example,Disadvantages: Ignores the time value of money Ignores cash flows after the payback period Biased against longterm projects Requires arbitrary acceptance criteria A project accepted based on the payback criteria may not have a positive NPV Advantages: Easy to understand Biased toward liquidity,Example,7.3 The Discounted Payback Period,How long does it take the project to “pay back” its initial investment, taking the time value of money into account? Decision rule: Accept the project if it pays back on a discounted basis within the specified time.,PP=1+1=2 year discount the cash follow (100,000 45,454.55 41,322.31 15,026.3) DPP=1+1+(10000045454.5541322.31)/15026.3 =2+0.88=2.88 year,Example (discount rate=10%),Example (discount rate=10%),PPA=1.62, PPB=2.3, PPC=2.61,7.4 Average Accounting Return,Another attractive, but fatally flawed, approach Ranking Criteria and Minimum Acceptance Criteria: Set by management,Consider the following three projects available to a firm:,Please calculate the average accounting return for each project.,Example,Disadvantages: Ignores the time value of money Uses an arbitrary benchmark cutoff rate Based on book values, not cash flows and market values Advantages: The accounting information is usually available Easy to calculate,7.5 The Internal Rate of Return,IRR: the discount rate that sets NPV to zero Minimum Acceptance Criteria: Accept if the IRR exceeds the required return Ranking Criteria: Select alternative with the highest IRR Reinvestment assumption: All future cash flows
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