金融学教学课件bodie2echapter06.ppt

1,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,1,Chapter 6:The Analysis of Investment Projects,ObjectiveExplain Capital BudgetingDevelop Criteria,易酸药修顿刁三搏介犊茵谱虎瞅亡眼宿吮徽息鳖惟味丢眩氏斩选豹狂佐展金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,2,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,2,Objectives,To show how to use discounted cash flow analysis to make decisions for business firms such as:Whether to enter a new line of businessWhether to invest in equipment to reduce costsRecall chapter 1,the process of analyzing such decisions is called capital budgeting.,档吨翟鞭珐牧婿扭拓绎闸愤悯阑帛赣合摄陕羚涣许歪洒斧原详倡蔽撤佃趣金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,3,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,3,Three Elements of Capital Budgeting,coming up with proposals for investment projectsevaluating themdeciding which ones to accept and which to reject,饮晨侯琅冬瀑该针恍产憨挝酪十翰裳丸砧燃势萄诌瓜脏沤舟剔详肛藻陡迭金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,4,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,4,The criteria of capital budgeting,Recall the objective of a firmMaximization of the market value of shareholders equityThe theory of how to do this was provided in the prior two chaptersCompute the net present value of the projects expected cash flows,and undertake only those with positive NPV,茫沂辣服堰规穿滚绳曲埂些庄脾绝顾傀洞商耗代韦坤诗舰窗时臀搁赂劝慎金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,5,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,5,Chapter 6 Contents,6.1 The Nature of Project Analysis6.2 Where do Investment Ideas come from?6.3 The Net Present Value Investment Rule6.4 Estimating a Projects Cash Flows6.5 Cost of Capital6.6 Sensitivity Analysis Using Spreadsheets,6.7 Analyzing Cost-Reducing Projects6.8 Projects with Different Lives6.9 Ranking Mutually Exclusive Projects6.10 Inflation&Capital Budgeting,窝符俭殃织讥程效隐扁估怂羞侗儿皑有礁背销肤年躁照伎住远鄙宴递剔龋金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,6,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,6,6.1 The Nature of Project Analysis,Basic unit of analysisthe individual investment projectProcedural OutlineForm ideas on how to increase shareholders equityPlan how to implement the ideasGather information on timing and magnitude of costs and benefitsApply NPV criterion,岭江预喊投鸦龟所氖事楔系贯醉住晰拣熔艘肪往郎剿喝逞捅幕沉赚佣鼻舵金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,7,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,7,6.2 Where do Investment Ideas Come From?,monitor existing&potential customers needsmonitor existing&potential technological capacity of the firmmonitor the competitions marketing,investment,patents,and technical recruitingmonitor production&distribution functions for revenue enhancement/cost savingsreward employees for innovative ideas,麦峙乏过孤若拭译林瓮鹤陇喂烧甥嚎吾滞抿梗鸿债蚀僳憨刑舍迈励肾菱交金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,8,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,8,6.3 Net Present Value Investment Rule,A projects net present value isthe amount by which the project is expected to increase the wealth of the firms current shareholdersAs a criterionInvest in proposed projects with positive NPV,郴袋榔颊界感式居啤恢鹅栓甫舱估亲凛才充蛤戏掉命公譬饺块祷扦温界件金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,9,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,9,Illustration,The following tables show the computation of NPVTo show the effect of the discount rate,three tables are shown based on different rates,盾病裹琉猩削熟确轩桩装愤年笑竹模援婉佣屹上赛壮汝烈徘伟褒燎锰杜愈金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,10,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,10,早紫茬阶才南糯私盯墒极鸿佃牢颓凉揉捕釜提氟侥市练统化嗡呻梅窘今艳金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,11,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,11,指芋凳厂基好误耻急陀春寞惫妄倘娇翅燎日臣吹翼饭壁垫庄淳培玩阳泰襟金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,12,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,12,蛆酣箩拌乘栗泪株弓妖敛鸽电鼠檀洽引腹柞短痰尺虞亥膝勺姑燎臀浙爱斌金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,13,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,13,Summary,The discount rate in the first scenario it was assumed to be 10%,and the resulting NPV was$20In the second scenario it was assumed to be 15%,and the NPV was-$69In the third scenario,the discount rate that resulted in a zero NPV was found,移鄙骡匣峙捍从孕蜜赤啤涡彭判八磷烦衔蕊仟好锐撤汲粕概裁津裳舆都貉金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,14,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,14,蔗宾蜕愚饼啦况澜美兆功捻银血征整畅郧盖庐浦涧窄落簇讹锯惑兜膘顷太金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,15,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,15,6.4 Estimating a Projects Cash Flows,It is important to remember that when making financial decisions only timed cash flows are useddepreciation is an expense,but is not a cash expense,and must be excludedthe tax benefit of depreciation,however,is a cash flow,and must be included,蔡辰住畅雨边趟义卢桌惟瞧啸过据崎叶拔卑酮莽肿授跺窘剿下钧意鸣潍投金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,16,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,16,Working Capital&Cash Flows,Some cash flows do not occur on the income statement,but involve timingworking capital additions and reductions are cash flowsat the end of a project,the sum of the nominal changes in working capital is zero,腹形聊思眶意担统友骚极中鹰攘穗脚藉酒嗅积去馋棉扬旨哺眠摘患桥土荣金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,17,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,17,Accruals&Deferrals,Take extra care if you are provided with net income information by an accountantthe flows forming net income may includeaccrualsdeferralsthese are typically small,and may some-times be ignored,盘厩世砍篙赂拨岸戈颗通脏细囱初构撂荆蝗盾域憋羔捕荒尔侄姨凄惹阁纯金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,18,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,18,Incremental Cash Flows,Only the incremental cash flows should form part of an investment decisionEvaluate the projected cash flows,by(category and)timing,both with and without the project,and find the differenceThis difference is a collection of timed cash flows,and this is what affects the wealth of the shareholders,啦胸她噪如抿波芦隔广秃淮酋蜜需溃毋溃姨沤履径汀劳感咐善钱盂办慕嘴金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,19,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,19,Illustration,A proposed project will generate$10,000 in revenue,but will causes another product line to lose$3,000 in revenuesThe incremental cash flow is only$7,000,教戳适烘诀毫鸳仑摸兰屁苛春捶洛携啃雍缨虚禾揍蹈癸登夹逾桓抽古肌慧金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,20,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,20,Sunk Costs,Shareholders are interested in the timing and magnitude of cash flowsFrom an investors vantage,a project gives rise to an alternative cash flowIf(alternative cash flows)-(original cash flows)is valuable to shareholders,do projectA sunk cost has no impact on future cash flows:it is irrelevant to shareholders,逢早北嵌僧揭住啊缅铺橙进奠发痊宅颊掺黄榔汐块葬疡翰奔爆书曼确子妊金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,21,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,21,Illustration,R&D expenses are$10,000 to-date for your project,and you plan to spend another$20,000,making$30,000 in allThe$10,000 is a sunk cost.The decision whether to undertake the project will not change this expenditureOnly the$20,000 is an incremental cost,and the$10,000 should be excluded,传智冻倘份暴摧蛤奔长澜横篙帆焉粮仿趣活竖挑几蚀妒泼剑苑疙液酚柏氰金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,22,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,22,Example 1,P174-175,复溉窄台集庶闭疤挚紊草巢踊量斜蓝捏沏虑袁名煮零王债哼邪磷矗呸棠划金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,23,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,23,Example 2,PCs Forever is a company that produces personal computers.It has been in operation for two years and is at capacity.It is considering an investment project to expand its production capacity.The project requires an initial outlay of$1,000,000:$800,000 for new equipment with an expected life of four years and$200,000 for additional working capital.The selling price of its PCs is$1,800 per unit,and annual sales are expected to increase by 1,000 units as a result of the proposed expansion.Annual fixed costs(excluding depreciation of the new equipment)will increase by$100,000,and variable costs are$1,400 per unit.The new equipment will be depreciated over four years using the straight line method with a zero salvage value.The hurdle rate for the project is 12%per year,and the company pays income tax at the rate of 40%.,问庐捉滓垒摘蚀捅庞窟枣懒笼鞘夜阔祟础官榆点喊咐增幻幢鬃耿矮挞驮睡金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,24,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,24,Example 2,What is the accounting break-even point for this project?What is the projects NPV?At what volume of sales would the NPV be zero?,癸礼虫狰社某霉椽赤缎捣揣谦篆芋再癌漳豫颜敛鸥搐盆字咋坎剥吐狐坞辫金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,25,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,25,6.5 The Cost of Capital,Cost of capital is the risk-adjusted discount rate(k)to use in computing a projects NPV.The standard way of dealing with uncertainty about future cash flows is to use a larger discount rate.When determining the cost of capitalthe risk of the project is,in general,different from the risk of the firms existing assetsonly the market-related risk is relevantonly the risk from a projects cash flows is relevant(not that of financing instruments),仰杜芥罚奄产恬衷堑导震革铲收像休甸啦噎粮丽胳揣或夸恳社玄汤寂耻过金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,26,Illustration of point 1,A firm whose average cost of capital for its existing assets is 16%per year gets an opportunity to purchase riskless U.S.T-bonds at below-market prices.Suppose that 25-year U.S.T-bonds paying$100 per year are selling in the market at$1000,and the firm could buy$1 million worth of these bonds for$950 each.If these cash flows are discounted at the firms cost of capital 16%per year,the present value of each bond is$634,and the NPV of the project would be-$315,830,which means it should be rejected.Common sense:you can buy something for$950 and sell it immediately for$1,000,would you do it?,釉呼奋狮批丧衅霄尘尹糟院酮焦辖悉嫉平盛两彩密逆辽峨纸浅冒绳氮黄欢金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,27,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,27,Illustration of point 3,Dell is planning to finance the$10 million outlay to undertake the PC1000 project by issuing bonds,and Dell can issue$10 million worth of bonds at an interest rate of 6%per year.Could we use 6%as the cost of capital in computing the NPV of the PC1000 project?If could,Dell would actually be able to do almost any projects,because of a super-low cost of capital;and all these projects cost of capital would be identically 6%!,先轩灵耸萧婴善獭赎鼎潞啄智靡啸蛾识扳毫磊柄丸议揪染探虏叛疗驻化孺金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,28,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,28,6.6 Sensitivity Analysis Using Spreadsheets,Will the project still be economical if some of the underlying variables are inaccurate,or astray from estimation?Spreadsheets are an excellent tool for exploring the influence of estimation errors on financial decisions,泰科浚涂菊靶欧挪悲韵津酵讼候九减浸遍葵再瞧挣叮妆译篆宫礼析条悟贮金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,29,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,29,Base Case,The following is an embedded Excel worksheet for the cash flow of a firmIt is generally a good practice to divide the worksheet into two segments,one containing only data,and the other containing only formulaeThis practice increases flexibility&reduces the chance of errorIt is also a good practice to name variables using Insert:Name:Create in Excel,宫队歌烯菇曾丈歼抹爸辣纱潜跋海唁聋圣沂转磅赠竿岳趣酷遗铅蔓眨徒汛金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,30,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,30,麓命喂效初菩恒撰横拥莎谣抠契铭俱测隆助屏箍躯穴翔诸夕磊强舅前缩飘金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,31,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,31,A Modified Scenario,In this case the cash is piling up(Watch out for IRS penalties in this case!)The assumption is now made that sales units grow by+2%,unit prices by-3%,and fixed costs by+8%(No,Victor:Fixed costs may vary with time.Yes,Valerie:Fixed costs do not vary with sales.)Assume a dividend of$1,000,000/year,篷磷哈到丛准启妇许者督凰串室酒士嗡傈纱柠送镇珊翁购津瞩址讫陋桔珍金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,32,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,32,愚偏赂授稽走旧扬坎哗搽抉帽肋颓圈哦作剔作儒讫院迎盾摊硷施烩杉选郁金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,33,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,33,Additional Scenarios,The following graphs are variations from the basic model constructed by changing one variable at a time:,绝董埋村房美改沾蓟墨颂弯启耍般地裔升存始宁帧娇姻紊子拈孵肥浦珐滔金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,34,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,34,Was 15%,孵糜晰痴鹊氢缅靖拌贺陶畅缅厢帆瓷煌兴牙俄缴旨断克簿湃蝎宪信保镀肯金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,35,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,35,Was 40%,窗溃憎棱人夯庆浴嚼锐柒缺吮伤画戍蓖发趁女责忻蚁炳盲隧涎涨品芥机捞金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,36,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,36,Was 0%,薪宫弱喳型珍臃汲缔指溜兑抨吗彪饮亮普忽孔村敖谴啪原熔织胞点丘哩闸金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,37,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,37,Was 75%,三河髓斩黄点疡掷寒怎贩缀劫涝接丹玄速政砂访阶本祷胃墙钉衙坐辅角枣金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,38,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,38,Was$3,100,000,憨燥堵拦溺添忧孩颅熄诊议犊鳃险嘘纶鉴拷雌牙锨舰伦滩鹊软仙府曙退蔓金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,39,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,39,Consequences,Notice that the reduced long-term viability of the product,together with the dividend for demands,will cause:a cash flow crisis early in year 5,negative accounting profits in year 6,and a serious negative operating cash flow in year 8 when the tax benefits of depreciation are finally consumed.,征交忱劝芭冠碧廉窑官肇掇恤谈苫膳翌缕什门铺傅遣胯桃奏蛤傲吴么擅沛金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,40,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,40,Graphs,Graphs are a useful supplement to spreadsheets as they may illustrate behavior of the model to continuing changes in a selected independent variableThe following graphs explore a model,宛偷祝眠骑蔽岿驰涅奴圾丁鞋牲毯纬仗缅炉梧本杜延猪锐肃腥另随荔啃旨金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,41,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,41,Table 6.4 Project Sensitivity to Sales Volume,筹器铝堵夫颤侮逗额抉屁啃斑蹭汪辉掘件驻竞死铭咎濒飘陶旦烃楼屿凰燃金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,42,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,42,殆哪步掏伍唾闪具右察抉浙承脱糠卧钳铸驻肇射居谎搁专邯撼品半恢遣惭金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,43,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,43,安跋棵蓑翘遁闷镭畸趴洲浩倾妆文八神墨匿沮壳捻摈钨酷慧社怕在葬啃闯金融学教学课件bodie2e_chapter06金融学教学课件bodie2e_chapter06,44,Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall,44,Sensitivity Analysis,Example 3:House