CapitalBudgeting_201.. - CITT

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Discounted Cash Flow – Net Present Value (NPV) • Discounted cash flow techniques base the decisions on the investment’s cash flows after it is adjusted for the time value of money. • In this presentation we will ignore the problem of incorporating risk into capital budgeting decisions. Also, the appropriate required rate of return (R.R.R.) will be given. ©2012, Varmelous Ind. Inc. -- Slide 16
Discounted Cash Flow – Net Present Value (NPV) • The two most frequently used discounted cash flow evaluators are: • Net Present Value (NPV) which measures discounted cash flows in versus discounted cash flows out, using the stipulated required rate of return, and • Internal Rate of Return (IRR) which is the rate of return at which the discounted cash flows in are equal to the discounted cash flows out, i.e., net present value is equal to zero. • Both of these methods have similar advantages and disadvantages. ©2012, Varmelous Ind. Inc. -- Slide 17
Page 1 and 2: Capital Budgeting Learning Outcomes
Page 3 and 4: The Concept of the Cost of Capital
Page 9 and 10: Difficulty and importance in findin
Page 11 and 12: Capital Budgeting • When evaluati
Page 13 and 14: Capital Budgeting • Cash Flows: -
Page 15: Capital Budgeting • Discounted Ca
Page 19 and 20: Discounted Cash Flow - Net Present
Page 39 and 40: Discounted Cash Flow - (IRR) IRR DC
Page 41: About the presenter • Michel has

CapitalBudgeting_201.. - CITT

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