Homework # 3 Due Wed May 26.

Slides:

Advertisements

Similar presentations

Chapter 14 Capital Budgeting Decision Part B. Other Approaches to Capital Budgeting Decisions Other methods of making capital budgeting decisions include...

Advertisements

You want to invest $ 1,000 in a mutual fund that offers a 5% guaranteed rate of return. Inflation is expected to be 1% per year. What will your investment.

Chapter 6: Making capital investment decisions

Chapter 11: Cash Flows & Other Topics in Capital Budgeting  2000, Prentice Hall, Inc.

Copyright © 2002 by Harcourt, Inc.All rights reserved. CHAPTER 12 Cash Flow Estimation and Risk Analysis Relevant cash flows.

© 2003 The McGraw-Hill Companies, Inc. All rights reserved. Making Capital Investment Decisions Chapter Ten.

1 Cash Flow vs. Accounting Income Project Income Statement Revenues -Depreciation (D) - All other costs EBT -Taxes Project NI (PNI) Cash flow = PNI + Noncash.

Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 9 Making Capital Investment Decisions.

IEN255 Chapter 8 - Taxes Agenda Net Income Corporate Income Taxes

Finance for Non-Financial Managers I Review of Basic Terms Asset/liability: An asset is an economic resource that a company owns. A liability is a resource.

7-8 simple and compound interest

Chapter 10 - Cash Flows and Other Topics in Capital Budgeting.

Net Present Value and Capital Budgeting (CB) Incremental Cash Flows (CFs), Inflation in CB, and Unequal Lives.

©2012 McGraw-Hill Ryerson Limited 1 of 45 Learning Objectives 4.Appraise the use of the cost of capital as the discount rate in capital budgeting analysis.

Chapter 10 Making Capital Investment Decisions McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. 10 Making Capital Investment Decisions.

1 Cash Flows and Other Topics in Capital Budgeting Chapter 10.

Lesson 10-1 Turning Savings Into Investments – Financing business operations and growth in an important part of the free-enterprise system. – People deposit.

Capital Expenditure Decisions

ACCT 2302 Fundamentals of Accounting II Spring 2011 Lecture 21 Professor Jeff Yu.

1 課程 6:Refinancing * 再看一個資本預算的例題 * 再訪 Buy or Lease *Refinancing *How do we adjust discount rates to reflect risk?

Financing a Business Chapter 16 Chapter 16 Financing a Business

CHAPTER 6 PowerPoint Author: LuAnn Bean, Ph.D., CPA, CIA, CFE Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution.

0 Chapter 10 Making Capital Investment Decisions.

Chapter Thirteen Relevant Information for Special Decisions © 2015 McGraw-Hill Education.

10 0 Making Capital Investment Decisions. 1 Key Concepts and Skills  Understand how to determine the relevant cash flows for various types of proposed.

10 0 Making Capital Investment Decisions. 1 Key Concepts and Skills  Understand how to determine the relevant cash flows for various types of proposed.

Financing and Producing Goods

1 Developing Project Cash Flow Statement Lecture No. 23 Chapter 9 Fundamentals of Engineering Economics Copyright © 2008.

© 2003 The McGraw-Hill Companies, Inc. All rights reserved. Making Capital Investment Decisions Lecture 10 (Ch 10)

Accounting Page 313.  Why?  To measure the success of a business  To assess performance  To get loans from banks  To plan ahead.

Example 1 Break Even Chapter 2.3 Suppose a company has its total revenue for a product given by and its total cost given by where x is the number of thousands.

Chapter 10 - Cash Flows and Other Topics in Capital Budgeting.

CAPITAL BUDGETING DECISIONS CHAPTER Typical Capital Budgeting Decisions Plant expansion Equipment selection Equipment replacement Lease or buy Cost.

Cash Flow Estimation Basic Concepts. Overview Most difficult aspect of capital budgeting Long time frame ▫Leads to uncertainty Typical bias: overstate.

Making Capital Investment Decision 1.Expansion 2.Replacement 3.Mandatory 4.Safety and regulatory 5.Competitive Bid price.

Cash Flows and Other Topics in Capital Budgeting

Accounting Rate of Return mefielding.com1. Definition  Accounting rate of return (also known as simple rate of return) is the ratio of estimated accounting.

6-1 CHAPTER 6 PowerPoint Author: LuAnn Bean, Ph.D., CPA, CIA, CFE McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Accounting: What the Numbers Mean Study Outline and Overhead Master Chapter 11.

Production and Productivity. Production Production is the process of transforming inputs into goods and services. We measure production as the total amount.

Cash Flow Estimation Byers.

Example: Replacement Problem continued

Cash Flows in Capital Budgeting

Managerial Finance Session 5/6

Part 1 : Understanding Money And Its Management (Ch1,2,3,4) Part 2: Evaluating Business and Engineering Assets (5,6,7)

Strategic Investment Decisions Dr Rilla Gantino, SE., AK., MM

PROBLEM SOLVING.

Capital Budgeting Decisions

Process Economics Factors that affect profitability

Selecting Financial Strategies

Tutorial 7 Homework Solution

Factors Affecting Profit

Chapter 7 Cash Flow of Capital Budgeting

CASH FLOWS IN CAPITAL BUDGETING

Fixed Assets and Depreciation

Cash Flow Estimation Byers.

Memory Challenge Finance (1).

Accounting and Financial Information

Chapter 23 Income Statements

Impact of External Change

Chapter 8 - Cash Flows and Other Topics in Capital Budgeting

Unit 3 Review (Calculator)

Day 1 – Total and Annual Return

2-3 Other Measures of Business Activity

Calculate 9 x 81 = x 3 3 x 3 x 3 x 3 3 x 3 x 3 x 3 x 3 x 3 x =

Capital Budgeting and Estimating Cash Flows

OUTLINE QUESTIONS? News? Experiences? Quiz Results Go over quiz

Principal Balance January 1

Process of Developing Project Cash Flows

Presentation transcript:

Homework # 3 Due Wed May 26

#1. Cost Savings Project under consideration 3 year life span Save $360 per year in operating costs Increase revenues by $200 per year Financed by 3-year loan at 5%

#2. Basic Replacement Problem Company is considering replacing a machine with a new design. New machine cost $100k; life of 8 years Will increase earnings from $20k per year to $51k per year Cost of capital is 12% Old machine has no salvage value Suppose that old machine could be sold for $15K How would that affect the calculation