Fundamentals of Financial Management (Concise 6th Edition)

360 Part 4 Investing in Long-Term Assets: Capital Budgeting CAPITAL BUDGETING CRITERIA: MUTUALLY EXCLUSIVE PROJECTS A firm with ...

Chapter 11 The Basics of Capital Budgeting 361 greater than 12% have been undertaken, does this mean that cash flows from past i ...

362 Part 4 Investing in Long-Term Assets: Capital Budgeting MIRR Project X costs $1,000, and its cash flows are the same in Year ...

Chapter 11 The Basics of Capital Budgeting 363 Here are the projects’ net cash flows (in thousands of dollars): 0 2 $80 $20 $60 ...

Ho me De p o t K e e p s Gr o wi n g Cash Flow Estimation and Risk Analysis © ALAN SCHEIN/ALAMY 12 CHAPTER 364 Home Depot Inc. ( ...

The basic principles of capital budgeting were covered in Chapter 11. Given a proj- ect’s expected cash! ows, it is easy to calc ...

366 Part 4 Investing in Long-Term Assets: Capital Budgeting mind is this: For capital budgeting purposes, the project’s cash! ow ...

Chapter 12 Cash Flow Estimation and Risk Analysis 367 additional $17 million, on top of the $2 million site study, to open the s ...

368 Part 4 Investing in Long-Term Assets: Capital Budgeting One of the best examples of a company fouling up as a result of not ...

Chapter 12 Cash Flow Estimation and Risk Analysis 369 12-2 ANALYSIS OF AN EXPANSION PROJECT In Chapter 11, we analyzed two proje ...

370 Part 4 Investing in Long-Term Assets: Capital Budgeting three zeros to streamline the presentation. Also note that we used E ...

Chapter 12 Cash Flow Estimation and Risk Analysis 371 some familiarity with Excel access the model and work through it to see ho ...

372 Part 4 Investing in Long-Term Assets: Capital Budgeting and reconsider the project before the $150 had been spent, we would ...

Chapter 12 Cash Flow Estimation and Risk Analysis 373 Data applicable to both machines: Sales revenues, which would remain const ...

374 Part 4 Investing in Long-Term Assets: Capital Budgeting (^4) Some professors may choose to cover some of the risk sections ( ...

Chapter 12 Cash Flow Estimation and Risk Analysis 375 Three separate and distinct types of risk are involved: Stand-alone risk, ...

376 Part 4 Investing in Long-Term Assets: Capital Budgeting 12-5 MEASURING STAND!ALONE RISK A project’s stand-alone risk re! ect ...

Figure 12-1, the slopes of the lines in the graph indicate how sensitive NPV is to each input: The larger the range, the steeper ...

378 Part 4 Investing in Long-Term Assets: Capital Budgeting the input variables would produce large changes in the NPV. Thus, se ...

Chapter 12 Cash Flow Estimation and Risk Analysis 379 12-5c Monte Carlo Simulation Monte Carlo simulation, so named because this ...