财务管理培训课件lecture7(ch7)

©TheMcGraw-HillCompanies,Inc.,20017-1Irwin/McGraw-HillIrwin/McGraw-HillChapter7FundamentalsofCorporateFinanceThirdEditionUsingDiscountedCashFlowAnalysistoMakeInvestmentDecisionsBrealeyMyersMarcusslidesbyMatthewWillIrwin/McGraw-Hill©TheMcGraw-HillCompanies,Inc.,2001©TheMcGraw-HillCompanies,Inc.,20017-2Irwin/McGraw-HillTopicsCoveredDiscountedCashFlows,NetProfitsIncrementalCashFlowsTreatmentofInflationSeparationofInvestment&FinancingDecisionsExample:BlooperIndustries©TheMcGraw-HillCompanies,Inc.,20017-3Irwin/McGraw-HillCashFlowvs.AccountingIncomeDiscountactualcashflowsUsingaccountingincome,ratherthancashflow,couldleadtoerroneousdecisions.ExampleAprojectcosts$2,000andisexpectedtolast2years,producingcashincomeof$1,500and$500respectively.Thecostoftheprojectcanbedepreciatedat$1,000peryear.Givena10%requiredreturn,comparetheNPVusingcashflowtotheNPVusingaccountingincome.©TheMcGraw-HillCompanies,Inc.,20017-4Irwin/McGraw-HillYear1Year2CashIncome$1500$500Depreciation-$1000-$1000AccountingIncome+500-500AccountingNPV=5001.10500110322(.)$41.CashFlowvs.AccountingIncome©TheMcGraw-HillCompanies,Inc.,20017-5Irwin/McGraw-HillTodayYear1Year2CashIncome$1500$500ProjectCost-2000FreeCashFlow-2000+1500+500CashNPV=-20001.1015001105001101423(.)(.)$223.CashFlowvs.AccountingIncome©TheMcGraw-HillCompanies,Inc.,20017-6Irwin/McGraw-HillIncrementalCashFlowsDiscountincrementalcashflowsIncludeAllIndirectEffectsForgetSunkCostsIncludeOpportunityCostsRecognizetheInvestmentinWorkingCapitalBewareofAllocatedOverheadCostsIncrementalCashFlowcashflowwithprojectcashflowwithoutproject=-©TheMcGraw-HillCompanies,Inc.,20017-7Irwin/McGraw-HillIncrementalCashFlowsIMPORTANTAskyourselfthisquestionWouldthecashflowstillexistiftheprojectdoesnotexist?Ifyes,donotincludeitinyouranalysis.Ifno,includeit.©TheMcGraw-HillCompanies,Inc.,20017-8Irwin/McGraw-HillInflationINFLATIONRULEBeconsistentinhowyouhandleinflation!!Usenominalinterestratestodiscountnominalcashflows.Userealinterestratestodiscountrealcashflows.Youwillgetthesameresults,whetheryouusenominalorrealfigures©TheMcGraw-HillCompanies,Inc.,20017-9Irwin/McGraw-HillInflationExampleYouownaleasethatwillcostyou$8,000nextyear,increasingat3%ayear(theforecastedinflationrate)for3additionalyears(4yearstotal).Ifdiscountratesare10%whatisthepresentvaluecostofthelease?1realinterestrate=1+nominalinterestrate1+inflationrate©TheMcGraw-HillCompanies,Inc.,20017-10Irwin/McGraw-HillInflationExample-nominalfiguresYearCashFlowPV@10%1800028000x1.03=82408000x1.03=82408000x1.03=8487.2080001.102372727368099236376564597078429998240110848720110874182110234....$26,......©TheMcGraw-HillCompanies,Inc.,20017-11Irwin/McGraw-HillInflationExample-realfiguresYearCashFlowPV@6.7961%1=7766.992=7766.99=7766.99=7766.9980001.037766.991.06882401.038487.201.038741.821.03234727273680992363765645970782642999776699106877669910687766991068234..........=$,.©TheMcGraw-HillCompanies,Inc.,20017-12Irwin/McGraw-HillSeparationofInvestment&FinancingDecisionsWhenvaluingaproject,ignorehowtheprojectisfinanced.Followingthelogicfromincrementalanalysisaskyourselfthefollowingquestion:Istheprojectexistencedependentonthefinancing?Ifno,youmustseparatefinancingandinvestmentdecisions.©TheMcGraw-HillCompanies,Inc.,20017-13Irwin/McGraw-HillBlooperIndustriesYear0123456CapInvestWCChangeinWCRevenuesExpensesDepreciationPretaxProfit.Tax(35%)Profit100001500407542794493471730390150025752042142251678303915000157501653817364182331000010500110251157612155200020002000200020003000325035133788407810501137123013261427195021132,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,28324622651(,000s)©TheMcGraw-HillCompanies,Inc.,20017-14Irwin/McGraw-HillBlooperIndustriesCashFlowFromOperations(,000s)Revenues-ExpensesDepreciation=Profitbeforetax.-Tax@35%=Netprofit+Depreciation=CFfromoperations1500010000200030001050195020003950,,,,,,,,or$3,950,000©TheMcGraw-HillCompanies,Inc.,20017-15Irwin/McGraw-HillBlooperIndustriesNetCashFlow(entireproject)(,000s)Year0123456CapInvest-10,000ChangeinWC-1,500-2,575-204-214-2251,6783,039CFfromOp3,9504,1134,2834,4624,651NetCashFlow-11,5001,3753,9094,0694,2376,3293,039NPV@12%=$3,564,000