1. Capital Budgeting Methods AGEC 489-689 Spring 2010

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5. Present Value Interest Factor (PIF) Table PIF r,n = (1 + r) -n

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7. Page 69 in booklet NPV > 0 suggests project is economically feasible NPV = 0 suggests indifference NPV < 0 suggests project is economically infeasible

8. Page 69 in booklet Discount rate = 5%

9. Present Value Interest Factor (PIF) Table PIF r,n = (1 + r) -n

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11. EPIF r,n = [1 – (1 / (1+ r) n )] / r Equal Payment Present Value Interest Factor (EPIF) Table

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15. EPIF r,n = [1 – (1 / (1+ r) n )] / r Equal Payment Present Value Interest Factor (EPIF) Table

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20. I will come back to this table when we cover pro forma analysis and how to project the values in this table required in investment analysis.

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27. Set NPV equal to zero and solve for T, the terminal value.

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29. G is the expected rate of appreciation

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32. Equal net cash flows

33. Page 83 in booklet Capital gains tax rate is 25% Capital gains tax rate is 25% Equal net cash flows

34. Page 83 in booklet Capital gains tax rate is 25% Capital gains tax rate is 25% Comparable land values Comparable land values Equal net cash flows

35. Page 83 in booklet Capital gains tax rate is 25% Capital gains tax rate is 25% 7% land value appreciation rate 7% land value appreciation rate Comparable land values Comparable land values Equal net cash flows

36. Page 83 in booklet Capital gains tax rate is 25% Capital gains tax rate is 25% 7% land value appreciation rate 7% land value appreciation rate 5% discount rate Comparable land values Comparable land values Equal net cash flows

37. Page 83 in booklet Capital gains tax rate is 25% Capital gains tax rate is 25% 7% land value appreciation rate 7% land value appreciation rate 5% discount rate Comparable land values Comparable land values Equal net cash flows 20 year economic life

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