FPN 503 Chapter Notes -Net Present Value, Cash Flow, Discount Window

• School: Ryerson University
• Department: Media Studies
• Course: FPN 503
• Professor: Tsogbadral Galaabaatar

Document Summary

Chapter 12 addresses the following questions: identify relevant cash flows and perform net present value (npv) analysis. Lo1 explain how strategic investment decisions are made. Lo4 apply alternative methods in analyzing strategic investment decisions. Lo6 explain how income taxes affect strategic investment decisions cash flows. Lo7 explain how real and nominal methods are used to address inflation in an npv analysis. Identify additional issues to be considered for strategic investment decisions. These learning questions (lo1 through lo7) are cross-referenced in the textbook to individual exercises and problems. Irr can be time consuming, particularly for projects having uneven cash flows. However, the use of a spreadsheet reduces the effort considerably. It is sometimes more difficult to estimate cash flows and choose an appropriate discount rate for npv than finding the internal rate of return or calculating payback or an accounting rate of return. Pros: many managers find irr intuitively easier to understand than npv.