Corporate Finance
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Section Two CAPITAL INVESTMENTS ...
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Chapter 8 Overview of Capital Budgeting OBJECTIVES Introduce students to the Civil Aviation Industry in India The nature of ...
164 Corporate Finance The Civil Aviation Industry in India^1 The Indian aviation industry can be broadly classified into two m ...
Overview of Capital Budgeting 165 In a BOT model, a private entity gets the mandate to finance, build and operate the project ...
166 Corporate Finance Traffic control and navigational aid systems are being provided by AAI without any cost to CIAL. The st ...
Overview of Capital Budgeting 167 CLASSIFICATION OF INVESTMENTS Investments can be classified on several bases like importance ...
168 Corporate Finance where EBIT = Earnings before interest and tax T = Marginal Tax Rate, and Average BV = (Beginning book va ...
Overview of Capital Budgeting 169 Method 2 Average earnings = (–40000 + 60000 + 100000 + 150000 + 200000)/5 = Rs 94000 Average ...
170 Corporate Finance These cash outflows are not reflected in the net income as they are taken to the balance sheet. For inst ...
Overview of Capital Budgeting 171 Limitations of the Payback Rule Although it is based on cash flows, time value of money is i ...
172 Corporate Finance Consider a project that requires an initial investment of Rs 10 lac. The expected cash flows are shown h ...
Overview of Capital Budgeting 173 NPV = [250000 × PVIF (r, 1)] + [300000 × PVIF (r, 2)] + [400000 × PVIF (r, 3)] [500000 × PV ...
174 Corporate Finance Limitations of IRR Since IRR is a scaled measure, it is biased towards smaller projects. IRR assumes tha ...
Overview of Capital Budgeting 175 Exhibit 8.4 Survey responses to the question, ‘How frequently does your firm use the followi ...
176 Corporate Finance anyone care about investments that are likely to generate returns during another executive’s regime? Fin ...
Overview of Capital Budgeting 177 c. Repairing an old assembly line. d. A proposal to manufacture spark plugs. Classify them a ...
178 Corporate Finance If the cost of capital is 18 percent which of the projects (if any) would you choose? Calculate NPV if c ...
Chapter 9 Free Cash Flow Valuation OBJECTIVES How to estimate truly incremental cash flows. How to estimate free cash flow t ...
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