C APITAL B UDGETING AND I NVESTMENT D ECISION Nia Christina 16598.

Slides:

Advertisements

Similar presentations

Capital Structure Theory

Advertisements

UNDERSTANDING AND ACCESSING FINANCIAL MARKET Nia Christina

Chapter Outline 6.1 Why Use Net Present Value?

Net Present Value and Other Investment Rules Chapter 5 Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

McGraw-Hill/Irwin Corporate Finance, 7/e © 2005 The McGraw-Hill Companies, Inc. All Rights Reserved. 6-0 CHAPTER 6 Some Alternative Investment Rules.

Key Concepts and Skills

Capital Budgeting. The process of determining and selecting the most profitable long-term (>1 year) projects. Firm ’ s capital budgeting decisions define.

CHAPTER 10 The Basics of Capital Budgeting 1. Payback Period 2. Discounted Payback 3. Net Present Value (NPV) 4. Internal Rate of Return (IRR) 5. Modified.

Copyright © 2012 Pearson Prentice Hall. All rights reserved. Chapter 10 Capital Budgeting Techniques.

ARTICLE OVERVIEW PRESENTATION: CLARK HILDABRAND Do Taxes Affect Corporate Financing Decisions? Jeffrey K. MacKie-Mason.

Copyright © 2011 Wolters Kluwer Health | Lippincott Williams & Wilkins Chapter 12 Measures of Association.

8-1 Chapter 8: Capital Budgeting Techniques. 8-2 n The process of planning and evaluating expenditures on assets whose cash flows are expected to extend.

Why use NPV? NPV approach is considered the best one for evaluating capital budgeting. NPV is easy to interpret and understand: –Positive NPV projects.

CAPITAL BUDGETING (A Short Review). CAPITAL BUDGETING Recall that one reason money has a time value is because of the opportunity to invest in productive.

University Admission in Russia: Do the Wealthier Benefit from Standardized Exams? Ilya Prakhov, Maria Yudkevich Center for Institutional Studies at the.

Locational Determinants of FDI: The Case of Vietnam Presented by Le Viet Anh Nagoya University, GSID, 1 st year PhD Student At JVEC’s Meeting 29 th May.

Privatisation and Financial Performance of European Airports Dr. Hans-Arthur Vogel.

Investment Decision Rules 2/07/06. Investment decision revisited Acceptable projects are those that yield a return greater than the minimum acceptable.

Yohanes Kristiawan H This article presents empirical evidence on the determinants of the capital structure of non-financial firms in India based.

Culture Capital and Social capital: An International Comparison of East Asian Expatriates CHANG, Chia-Ming Soochow University, Taipei, Taiwan 06 April.

Investment Decision Rules 04/30/07 Ch. 10 and Ch. 12.

Prepared by Arabella Volkov University of Southern Queensland.

Seminar in Financial Management

Measuring Return on Investments: Investment Decision Rules and Project Interactions 02/04/08 Ch. 5 part 2 and Ch. 6.

Economic Externality and Government Roles in Environmental VCs Mannie Manhong Liu 刘曼红 Renmin University of China VCChina, Beijing WRI Conference: Oct.

Chapter 10: The Basics Of Capital Budgeting. 2 The Basics Of Capital Budgeting :

Hypothesis Testing. Outline The Null Hypothesis The Null Hypothesis Type I and Type II Error Type I and Type II Error Using Statistics to test the Null.

 From the CRP (Course Reading Package): Capital Budgeting: NPV v. IRR Controversy  From the student: The Incorporation of Risk in The Capital Investment.

Advanced Managerial Finance Spring Venture Capital It refers to the capital provided to early stage, high potential, high risk, growth startup firms.

© Cumming & Johan (2013) Portfolio Size Cumming and Johan (2013 Chapter 17) 1.

Is there a relationship between the lengths of body parts ?

Reviewing Key Terms Match the following terms with the descriptions below. A. factors of production F. developing nations B. newly developed nations G.

Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Wasanthi Madurapperuma Social Network of Entrepreneurs & Small Business Growth Related Literature & Research Gap Unit of Analysis - Small Retail Businesses.

1 Capital Budgeting Capital budgeting - A process of evaluating and planning expenditure on assets that will provide future cash flow(s).

1 Copyright © 2008 Cengage Learning South-Western Heitger/Mowen/Hansen Capital Investment Decisions Chapter Twelve Fundamental Cornerstones of Managerial.

Venture Capital and the Finance of Innovation [Course number] Professor [Name ] [School Name] Chapter 4 The Cost of Capital for VC.

Some Alternative Investment Rules

© Cumming & Johan (2013) Fund Size Cumming and Johan (2013 Chapter 18) 1.

Summer school “Entrepreneurship in Russia: theory and practice, research methodology” Golits y no August 2009 Russian Early Entrepreneurship Under Global.

The Theory of Capital Markets Rational Expectations and Efficient Markets.

Capitalism and Socialism Defined in brief. Capitalism defined  Capitalism is an economic system in which trade, industries, and the means of production.

Revised In our presentation, our main idea is that corruption lowers Efficiency, and in the long –run, corruption will slower economic growth. From our.

Conflicting NPV and IRR ranking The ranking of alternative proposal and the decision regarding selection of a proposal on the basis of NPV and IRR may.

Managerial Optimism and Corporate Investment: Some Empirical Evidence from Taiwan Yueh-hsiang Lin Shing-yang Hu Ming-shen Chen Department of Finance National.

Chapter 16 Data Analysis: Testing for Associations.

2010 NTUICF2010 NTUICF NTUICF Discussion on “IPO Underpricing and the Evolutions of Regulations: Evidence from Chinese Stock Markets” Gang Wang.

Capital budgeting.

M Thomas Is the IPO Pricing Process Efficient? Michelle Lowry G William Schwert (Latest Draft February 2003)

Capital Budgeting: Decision Criteria

By Caroline Eva Mursito Foreign Ownership and Investment Evidence from Korea.

Should the Government be in the Banking Business? The Role of State-Owned and Development Banks Eduardo Levy-Yeyati (UTDT) Alejandro Micco (IDB) Ugo Panizza.

Lecture 18. Lecture Review Volume of world mergers and acquisition International Acquisitions Defensive tactics against Hostile takeover.

0 Corporate Finance Ross  Westerfield  Jaffe Seventh Edition 6 Chapter Six Some Alternative Investment Rules.

U8-1 UNIT 8 Project Valuation Should we build this plant?

INSTITUTES OF INNOVATIVE DEVELOPMENT: THEIR ROLE IN REGIONAL CLUSTERS Anna Bykova PhD student, Higher School of Economics Russia 23th September 2011 Milocer,

BY: CAROLINE EVA MURSITO th CLASS OF SEMINAR IN FINANCE DIVIDEND POLICY.

Capital Budgeting Tools and Technique. What is Capital Budgeting In “Capital budgeting” capital relates to the total funds employs in an enterprise as.

+ Mortality. + Starter for 10…. In pairs write on a post it note: One statistic that we use to measure mortality On another post it note write down: A.

6/22/2016 Prepared by Prof G Sabarinathan, IIMB. All rights reserved. 1 Course Coverage Investment and Capital Budgeting Routine CapEx Growth CapEx Expansion.

Part III – Developing the Entrepreneurial Plan Chapter 7 – Environmental Assessment: Preparation for a New Venture Chapter 8 – Marketing Research for New.

1 5. Business Valuation, Risk Analysis, The Due Diligence Process for the New Venture 5.1 Business Valuation Methods for NV’s 5.2 Risk Estimation and Analysis.

Chapter Outline 6.1 Why Use Net Present Value?

Hypothesis Testing.

Effective corporate governance mechanisms for the banking industry

Joint Ventures and the Option to Expand and Acquire

Spearman Rank Order Correlation Example

Section Objectives Compare and contrast sources of financing for start-up ventures. Describe the resources available to entrepreneurs to start a business.

Private Placements, Cash Dividends and Interests Transfer: Empirical Evidence from Chinese Listed Firms Source: International review of economics & finance,

Statistical Test A test of significance is a formal procedure for comparing observed data with a claim (also called a hypothesis) whose truth we want to.

Presentation transcript:

C APITAL B UDGETING AND I NVESTMENT D ECISION Nia Christina 16598

A RTICLE FROM CRP Title : Capital Budgeting: NPV v. IRR Controversy Theory used by the article / research: Capital Budgeting, analysis of potential additions to fixed assets, long term decisions; involved large expenditures.

Hypothesis of research: NPV/IRR method is plain mathematics and does not pretend to be ranking device; it cannot be used as such either. Mathematics is yes indeed a tool, but economics can only then be the master if the tool is used properly and the result are interpreted correctly. Variable use in research: investment Method of analysis: Net Present Value (NPV) IRR

The Result: By way of the NPV/IRR method, one can assess the conditional acceptability of one investment proposal solely, and mathematics does not pretend that it states anything meaningful with regard to the order of two (or more) investment Conclusions: The NPV/IRR method neglects substantialism. The NPV e.q IRR fails in numerous cases in making sound capital budgeting decision. Because in fact that the NPV/IRR method meets only nominalism.

A RTICLE FROM STUDENTS The reason: Interested, because in China and Russia the strength of relationship can affect strongly in making investment decision.

Title: Network triads: transitivity. Referral and venture capital decisions in China and Russia Theory used by the article / research: Granovetter 1973, Social network theory postulates that personal networks actors tend to be transitive: one friends’ friends are likely to become one’s friend as well.

Hypothesis of research: 1. The stronger the tie between the referee and the venture-capitalist, the stronger the referral. 2. The stronger the tie between the referee and the entrepreneur, the stronger the referral. 3. The venture capitalist’s trust in the referee is associated positively with investment decision. 4. The impact of referee-venture capitalist tie on referral will be greater in China than in Russia. 5. The impact of referee-entrepreneur tie on referral will be greater in China than in Russia. 6. The impact of venture capitalist’s trust in the referee on investment decisions will be greater in China than in Russia.

Variable use in research: Independent variables Referee-venture capitalist tie Referee-entrepreneur tie Venture capitalist’s trust in the referee Dependent variables Investment selection Control variables VC firm age The entrepreneurial team scale

Method of analysis: Sample and data collection The result: 40% of private equity firms were fully or partially state-owned. The Chinese and Russian venture capitalists appeared to be experienced. Two samples (china-Russia) significantly differ from each other in several variables. For example: Third-party referrals are stronger in Russia. However, the referee- venture capitalist tie is stronger in China. The effect of dyadic ties on referral are significant and stable.

C ONT ’ D VC firm size, IT industry, state ownership, entrepreneurial team, and growth potential have significant and positive effect on investment decisions. Hypothesis 3: supported Reveal that the effect of the predictor variable on the outcome variables are significant and positive, and the regression coefficients are the same in two countries. Hypothesis 4: not confirmed. Reveal that the effects of referee-entrepreneur tie are statically not significant in both Beijing and Moscow. Hypothesis 5: rejected. Reveals that trust of referee has no impact on investment decisions in China. In contrast other model shows that venture capitalist’s trust in the referee has significant positive effect on the investment decision of Russian venture capitalists. Hypothesis 6: not supported.

Conclusions: An empirical proof of the hitherto untested postulated of social network theory that transitivity is a function of tie strength and interpersonal trust. Triads are transitive or not depends on the referee- investor relationship, referee-entrepreneur ties and trust in the third party. The effects of dyadic ties and interpersonal trust on referral and investment decisions seems to be universal rather than country-or context specific, because industry factors have dominant effects on these outcomes variables. Interpersonal trust has greater effect on dependent variable in Russia.

T HANK Y OU