CapitalBudgeting_201.. - CITT

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Discounted Cash Flow – Net Present Value (NPV) • The main advantages are: • All net cash flows over the life of the project are considered in the evaluation, and • The time value of money is recognized, i.e., earlier cash flows are better (worth more) than are later cash flows. • The main disadvantages are: • Much detailed information must be identified and gathered, and • Calculations can be time consuming and complex. ©2012, Varmelous Ind. Inc. -- Slide 18
Discounted Cash Flow – Net Present Value (NPV) • However, modern personal computers with spreadsheet software have negated much of the computational complexity and allow for almost instantaneous what-if scenarios for alternate consideration in the evaluation process. • The use of recent integral computing techniques contained in most spreadsheet programs like Excel, make the computation of both NPV and IRR relatively simple. Tools like Goal Seek will facilitate the computation of IRR once NPV has been calculated using the requisite data. ©2012, Varmelous Ind. Inc. -- Slide 19
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 and 16: Capital Budgeting • Discounted Ca
Page 17: Discounted Cash Flow - Net Present
Page 21 and 22: 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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