capitalbudgeting(ppt47)英文版-it(编辑修改稿)

capitalbudgeting(ppt47)英文版-it(编辑修改稿)内容摘要：

rate of return, present value, internal rate of return, and economic value added relate to capital budgeting. 8 21  2020 Prentice Hall Business Publishing Management Accounting, 3/E, Atkinson, Banker, Kaplan, and Young Approaches to Capital Budgeting – Payback – Accounting rate of return – Net present value – Internal rate of return – Profitability index – Economic value added 8 22  2020 Prentice Hall Business Publishing Management Accounting, 3/E, Atkinson, Banker, Kaplan, and Young Approaches to Capital Budgeting Shirley’s Doughnut Hole is considering the purchase of a new machine that will cost $70,000 and last five years. Its salvage value is $10,000. The machine will increase profits by $20,000 per year. The cost of capital is 10%. Is this investment worthwhile? 8 23  2020 Prentice Hall Business Publishing Management Accounting, 3/E, Atkinson, Banker, Kaplan, and Young Payback Criterion The payback period, or payback criterion, putes the number of periods needed to recover a project’s initial investment. Payback time = 70,000 247。 20,000 = years 8 24  2020 Prentice Hall Business Publishing Management Accounting, 3/E, Atkinson, Banker, Kaplan, and Young Accounting Rate of Return Criterion The accounting rate of return approximates the return of investment. Accounting Rate of Return = Average Ine 247。 Average Investment 8 25  2020 Prentice Hall Business Publishing Management Accounting, 3/E, Atkinson, Banker, Kaplan, and Young Accounting Rate of Return Criterion What is the straightline method annual depreciation? ($70,000 – $10,000) 247。 5 = $12,000 What is the increased annual ine? $20,000 – $12,000 = $8,000 What is the average investment? ($70,000 + $10,000) 247。 2 = $40,000 8 26  2020 Prentice Hall Business Publishing Management Accounting, 3/E, Atkinson, Banker, Kaplan, and Young Accounting Rate of Return Criterion What is the accounting rate of return? ARR = $8,000 247。 $40,000 = 20% If the accounting rate of return exceeds the criterion, or target rate of return, the project is acceptable. The accounting rate of return does not consider the explicit timing of cash flows. 8 27  2020 Prentice Hall Business Publishing Management Accounting, 3/E, Atkinson, Banker, Kaplan, and Young Net Present Value Criterion The present value is the sum of the present values of all cash inflows and outflows associated with a project. This model is the most widely remended approach to capital budgeting. It specifically considers the time value of money. 8 28  2020 Prentice Hall Business Publishing Management Accounting, 3/E, Atkinson, Banker, Kaplan, and Young Net Present Value Criterion What are the steps in puting NPV? 1 Choose the period length. 2 Identify the firm’s cost of capital. 3 Identify the incremental cash flows. 4 Compute the PV of the cash flows. 5 Sum the project’s cash flows and determine the NPV. 6 Accept or reject the project. 8 29  2020 Prentice Hall Business Publishing Management Accounting, 3/E, Atkinson, Banker, Kaplan, and Young Net Present Value Criterion Periods Amount PV Factor Present Value 0 ($70,000) ($70,)。