Introduction to Corporate Finance

Ross et al.: Fundamentals

of Corporate Finance, Sixth

Edition, Alternate Edition

9. Net Present Value and Other Investment Criteria

Other Investment Criteria

© The McGraw−Hill^301

Companies, 2002

CAPITAL BUDGETING

PART FOUR

CHAPTER 9 Net Present Value and Other Investment Criteria The most important subject in
this chapter is net present value. Chapter 9 compares and contrasts net present value with other
methods for selecting among alternative investment proposals.

CHAPTER 10 Making Capital Investment Decisions This chapter describes how to actually
do a net present value and discounted cash flow analysis. The primary aim of the chapter is to describe
how to identify a project’s incremental cash flows. Chapter 10 also discusses how to handle such issues
as sunk costs, opportunity costs, financing costs, net working capital, and erosion.

CHAPTER 11 Project Analysis and Evaluation This chapter discusses problems regarding the
reliability of net present value estimates. It also describes some important tools for project analysis, such
as break-even analysis, operating leverage, and sensitivity analysis.

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