ACCT 001A Lecture Notes - Lecture 27: Payback Period, Moe Williams, Cash Flow
7 Jan 2021
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Unless the suppliers, workers, interest to the bondholders and taxes to the government have been paid, only then can shareholders claim the remaining value in the organization. This is done by design so fm goal is shareholder wealth. Market value equity = share price x # of shares. Capital investment analysis - pt 1: introduction 4. 3. Capital budgeting/expenditure/investment decision: how much and what to invest in for future growth. Corporation must spend considerable time on analysis to ensure good decision-making regarding where they invest. Identification >: required investment (safety, in delta example, replacement investment (new planes, expansion investment (should they build more hangars, diversification investment (market research, what competitors are doing; free. Evaluation: estimate the benefits and costs of project >>: expected cash flow stream, discount rate (cost of capital) Selection: techniques/decision rules >>>: net present value, profitability index, internal rate of return, payback period. Evaluating long term investment projects: must understand the concept of the time value of money.
