Principles of Corporate Finance
Sensitivity Analysis Example - continued NPV Calculations for Pessimistic Market Size Scenario Net Cash Flow - 15 3.38 NPV= +5.7 ...
Sensitivity Analysis Example - continued NPV Possibilities (Billions Yen) Fixed Cost 0.4 3.4 6.5 Unit Var Cost -15.0 3.4 11.1 Un ...
Break Even Analysis w Point at which the NPV=0 is the break even point. w Otoban Motors has a breakeven point of 8,000 units sol ...
Monte Carlo Simulation w Step 1: Modeling the Project w Step 2: Specifying Probabilities w Step 3: Simulate the Cash Flows Model ...
Decision Trees 960 (.8) 220(.2) 930(.4) 140(.6) 800(.8) 100(.2) 410(.8) 180(.2) 220(.4) 100(.6) +150(.6) +30(.4) +100(.6) +50(.4 ...
Decision Trees 960 (.8) 220(.2) 930(.4) 140(.6) 800(.8) 100(.2) 410(.8) 180(.2) 220(.4) 100(.6) +150(.6) +30(.4) +100(.6) +50(.4 ...
Decision Trees 960 (.8) 220(.2) 930(.4) 140(.6) 800(.8) 100(.2) 410(.8) 180(.2) 220(.4) 100(.6) +150(.6) +30(.4) +100(.6) +50(.4 ...
Decision Trees 960 (.8) 220(.2) 930(.4) 140(.6) 800(.8) 100(.2) 410(.8) 180(.2) 220(.4) 100(.6) -550 NPV=? -250 NPV=? -150 0 or ...
Decision Trees 960 (.8) 220(.2) 930(.4) 140(.6) 800(.8) 100(.2) 410(.8) 180(.2) 220(.4) 100(.6) -550 NPV=? -250 NPV=? -150 0 or ...
Decision Trees 960 (.8) 220(.2) 930(.4) 140(.6) 800(.8) 100(.2) 410(.8) 180(.2) 220(.4) 100(.6) 812 456 660 364 148 +150(.6) 710 ...
Decision Trees 960 (.8) 220(.2) 930(.4) 140(.6) 800(.8) 100(.2) 410(.8) 180(.2) 220(.4) 100(.6) 812 456 660 364 148 +150(.6) 710 ...
Decision Trees 960 (.8) 220(.2) 930(.4) 140(.6) 800(.8) 100(.2) 410(.8) 180(.2) 220(.4) 100(.6) 812 456 660 364 148 +150(.6) 710 ...
u Where Net Present Values Come From Principles of Corporate Finance Brealey and Myers Sixth Edition Chapter 11 ...
Topics Covered w Look First To Market Values w Forecasting Economic Rents w Marvin Enterprises ...
Market Values wSmart investment decisions make MORE money than smart financing decisions ...
Market Values w Smart investments are worth more than they cost: they have positive NPVs w Firms calculate project NPVs by disco ...
Market Values w Projects may appear to have positive NPVs because of forecasting errors. e.g. some acquisitions result from erro ...
Market Values w Positive NPVs stem from a comparative advantage. w Strategic decision-making identifies this comparative advanta ...
Market Values w Don’t make investment decisions on the basis of errors in your DCF analysis. w Start with the market price of th ...
Market Values w Don’t assume that other firms will watch passively. Ask -- How long a lead do I have over my rivals? What will h ...
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