Muutke küpsiste eelistusi

E-raamat: Advanced Capital Budgeting: Refinements in the Economic Analysis of Investment Projects

3.67/5 (5 hinnangut Goodreads-ist)
(Cornell University, New York, USA), (Cornell University, New York, USA)
  • Formaat: PDF+DRM
  • Ilmumisaeg: 04-Feb-2014
  • Kirjastus: Routledge
  • Keel: eng
  • ISBN-13: 9781317828839
Teised raamatud teemal:
  • Formaat - PDF+DRM
  • Hind: 85,79 €*
  • * hind on lõplik, st. muud allahindlused enam ei rakendu
  • Lisa ostukorvi
  • Lisa soovinimekirja
  • See e-raamat on mõeldud ainult isiklikuks kasutamiseks. E-raamatuid ei saa tagastada.
Advanced Capital Budgeting: Refinements in the Economic Analysis of Investment ProjectsSuurem pilt
  • Formaat: PDF+DRM
  • Ilmumisaeg: 04-Feb-2014
  • Kirjastus: Routledge
  • Keel: eng
  • ISBN-13: 9781317828839
Teised raamatud teemal:

DRM piirangud

  • Kopeerimine (copy/paste):

    ei ole lubatud

  • Printimine:

    ei ole lubatud

  • Kasutamine:

    Digitaalõiguste kaitse (DRM)
    Kirjastus on väljastanud selle e-raamatu krüpteeritud kujul, mis tähendab, et selle lugemiseks peate installeerima spetsiaalse tarkvara. Samuti peate looma endale  Adobe ID Rohkem infot siin. E-raamatut saab lugeda 1 kasutaja ning alla laadida kuni 6'de seadmesse (kõik autoriseeritud sama Adobe ID-ga).

    Vajalik tarkvara
    Mobiilsetes seadmetes (telefon või tahvelarvuti) lugemiseks peate installeerima selle tasuta rakenduse: PocketBook Reader (iOS / Android)

    PC või Mac seadmes lugemiseks peate installima Adobe Digital Editionsi (Seeon tasuta rakendus spetsiaalselt e-raamatute lugemiseks. Seda ei tohi segamini ajada Adober Reader'iga, mis tõenäoliselt on juba teie arvutisse installeeritud )

    Seda e-raamatut ei saa lugeda Amazon Kindle's. 

Written by authors of established texts in this area, this book is a companion volume to the classic The Capital Budgeting Decision. Exploring this key topic in corporate finance the authors examine the complexities of capital budgeting as well as the opportunities to improve the decision process where risk and time are important elements.

Containing Global Aspects sections that cover cross-border decision-making, this book also emphasizes the application of capital budgeting techniques to a variety of issues, including the hugely significant buy versus lease decision that cost corporations billions each year.

It gives in-depth coverage to:











real options - the value of a project must take into consideration the flexibility that it provides management, acknowledging the option of making decisions in the future when more information is available decomposing cash flows - a project consists of many series of cash flows and each series deserves its own specific risk-adjusted discount rate. Decomposing the cash flows of an investment highlights the fact that while managers are generally aware that divisions and projects have different risks, too often they neglect the fact that the cash flow components may also have different risks, with severe consequences on the quality of the decision-making.

Designed to assist those making business decisions at all levels, this volume is essential reading for all those working in or studying capital budgeting.
List of illustrations xiii
Preface xvii
PART I CAPITAL BUDGETING AND VALUATION UNDER CERTAINTY 1
1 THE STATE OF THE ART OF CAPITAL BUDGETING
3
Decision-making and corporate objectives
3
The evolution of capital budgeting practice
5
Surveys of practice
5
The discount rate
7
Cash flow components
8
The calculation of the discount rate
8
The time risk interaction
8
Real options
9
Three problems
10
Time discounting
10
Present value addition rule
11
Present value multiplication rule
11
The term structure of interest rates
11
Risk and diversification
13
Strategic considerations
14
Three basic generalizations
16
The capital market
16
Global business aspects
17
Conclusions
17
Problems
18
Discussion question
19
Bibliography
19
2 AMOUNTS DISCOUNTED AND DISCOUNT RATES
21
The FCF method
23
The CCF method
24
The adjusted present value method
25
Equivalence of the methods
26
The FCF method
27
The CCF calculation: the value to investors
27
Adjusted present value
28
Costs of financial distress
29
The costs of capital
29
The WACC with debt
31
Valuation: a summary
32
With no debt
33
With $600 of debt substituted for stock
33
With debt (use of A PV)
34
The use of r* (the CCF method)
34
Calculation of discount rates
35
Finite-lived assets
36
Global business aspects
36
Conclusions
37
Problems
38
Discussion question
39
Bibliography
39
Appendix derivations
39
PART II CAPITAL BUDGETING AND VALUATION UNDER UNCERTAINTY 41
3 CAPITAL BUDGETING WITH UNCERTAINTY
43
Tree diagrams
43
Period-by-period summaries
46
Sensitivity analysis
46
Simulation
48
Risk preferences
50
Certainty equivalents
52
Time and risk
53
Risk adjusted discount rates
54
The required return
55
Default-free rate of discount
55
The borrowing rate
57
Changing the uncertainty
57
Global business aspects
58
Conclusions
58
Problems
59
Discussion question
60
Bibliography
60
4 ELEMENTS OF TIME AND UNCERTAINTY
62
The investment process
63
The discount rate
66
Converting expected cash flows
68
The discount rate assumption
69
Capital budgeting with constant risk aversion
69
Capital budgeting with a constant risk adjusted rate
71
A capital market perspective
73
A qualification of the CAPM decision rule
74
Global business aspects
74
Conclusions
74
Quiz
75
Problems
75
Discussion question
76
Solution to quiz
76
Bibliography
77
5 THE STATE PREFERENCE APPROACH
79
Prices with certainty
79
Prices with uncertainty
80
The three factors
82
The expected risk-adjustment
84
Countercyclical assets
84
Required rates of return
85
Application of the risk-adjusted present value approach
86
Multi period investments
86
Applying the risk-adjusted present value factors
88
Global business aspects
90
Conclusions
90
Problems
91
Discussion question
93
Bibliography
94
6 RESOLUTION OF UNCERTAINTY
95
Risks, returns and the resolution of uncertainty
95
Introducing the three assets
97
Asset values by node
101
Expected rates of return by asset and node
102
Conclusions about the three assets
104
An alternative calculation
106
Introducing the two projects
107
Global business aspects
108
Generalizations
108
Problems
109
Discussion question
111
Bibliography
111
7 DIVERSIFICATION AND RISK REDUCTION
112
Systematic and unsystematic risk
113
Diversification
114
Introduction to portfolio analysis
115
The portfolio problem in perspective
116
The co-variance
117
The efficient frontier of investment alternatives
120
Perfect positive correlation
120
Perfect negative correlation
121
Imperfect correlation
122
The power of diversification: independent investments
122
Positively correlated investments
124
Observations regarding diversification
126
The risk-free asset
127
The assumptions
127
Portfolio analysis with a riskless security: the capital asset pricing model
128
The expected return
130
Use of the CAPM
131
Systematic and unsystematic risk
131
Implications for corporate investment policy
133
Unsystematic risk
134
Global business aspects
134
Conclusions
135
Review problem 1
136
Review problem 2
136
Review problem 3
136
Problems
137
Discussion question
140
Solution to review problem 1
140
Solution to review problem 2
141
Solution to review problem 3
141
Bibliography
142
Appendix: Statistical background
143
8 PROJECTS WITH COMPONENTS HAVING DIFFERENT RISKS
145
A new product project with two different cash flow components
146
Calculating the value of an asset by discounting its net cash flow
147
Increasing the proceeds
150
A new market for an old product
150
Disadvantages of using a single discount rate
152
Finding the composite discount rate for projects with a finite life
152
Buy versus lease
154
Discount rates and corporate income taxes
156
The present value calculation technique used
157
Global business aspects
157
Conclusions
158
Problems
158
Discussion question
160
Bibliography
160
Appendix: Derivation of the formula for the after-tax discount rate for a cash flow component
160
9 PRACTICAL SOLUTIONS TO CAPITAL BUDGETING WITH UNCERTAINTY
162
The two basic approaches
162
Approach 1: Using payback, present value profile, and sensitivity analysis
163
Approach 2: Calculate the net present value of the expected cash flows
164
WACC: The weighted average cost of capital
165
The cost of retained earnings
167
Costs of retained earnings and of equity with investor taxes
168
Costs of retained earnings with investor taxes
168
Cost of new equity capital with investor taxes
169
Debt and income taxes
171
The relevant source of funds
171
Global business aspects
172
Computing the firm's weighted average cost of capital
172
Capital structure and the effect on the WACC
173
The optimum capital structure
174
The firm's WACC and investments
175
The project's WACC
177
The pure play
177
Default-free rate of discount
178
Discounting stock equity flows
179
Simulation and the Monte Carlo method
181
Value-at-risk
183
Conclusions
183
Problems
184
Discussion question
185
Bibliography
186
PART III OPTION THEORY AS A CAPITAL BUDGETING TOOL 187
10 REAL OPTIONS AND CAPITAL BUDGETING
189
Two types of stock options
192
Valuing call options on common stock
193
The value of a call option on common stock: a numerical example
193
Formulas for call option valuation
195
Formulas for composition of the replicating portfolio
196
Certainty equivalent formulas for the value of an option
198
A multi-period call option
199
The replicating portfolio method for a two-period option
199
The certainty equivalent method for a two-period option
201
Number of periods
202
Valuing real options
202
Description and valuation of the underlying asset without flexibility
203
An option to abandon
206
An option to expand
209
Multiple options on the same asset
210
Conclusions
210
Problems
211
Discussion question
211
Bibliography
212
Appendix A: Increasing accuracy by using a large number of short periods
213
Appendix B: Valuation with multiple options on an asset
215
PART IV APPLICATIONS OF CAPITAL BUDGETING 219
11 GROWTH CONSTRAINTS
221
External capital rationing
221
Internal capital rationing
222
Scarce factors of production
223
Ranking of investments
223
Programming solutions
224
Global business aspects
224
Conclusions
224
Problems
225
Discussion question
227
Bibliography
227
12 THE VALUATION OF A FIRM
228
Present value of dividends
229
Present value of earnings minus new investment
230
Present value of growth opportunities
230
A terminal value model
231
Multipliers
231
Free cash flow
232
Book value
233
Value with zero debt
233
Market capitalization
236
Substitution of debt for equity
236
Option theory
237
Present value of economic income
237
Valuation for acquisition
238
DCF versus comparables
238
Mergers and acquisitions
238
Forecasting the post-acquisition price
239
Global business aspects
241
Conclusions
241
Problems
241
Discussion question
242
Bibliography
242
13 USING ECONOMIC INCOME (RESIDUAL INCOME) FOR VALUATION
243
The discounted cash flow model accepted by finance theorists
244
Tile economic income model
244
Valuation using economic income
246
Other methods of valuation
248
Comparing ROI and economic income
249
Global business aspects
250
Conclusions
250
Problems
250
Discussion question
254
Bibliography
254
14 PRESENT VALUE ACCOUNTING
255
A management seminar
255
Basic Concepts
256
Economic depreciation, income, and return on investment
256
Application to assets with zero present value
257
An investment with a positive net present value
258
Combining investments
259
Two investments with different risks
260
Better income measures
262
Internal rate of return and taxes
263
Global business aspects
265
Conclusions
265
Problems
266
Discussion question
270
Bibliography
270
15 PERFORMANCE MEASUREMENT AND MANAGERIAL COMPENSATION
272
Problems of agency
273
Performance measurement and managerial compensation
274
Accounting measures
274
Income
275
Return on investment (ROI)
275
ROI and investment decision-making
277
The case of the resource benefiting the future
277
The computation of income and ROI
278
Comparing ROI and economic income
280
Summary of complexities
280
Summary of economic income advantages
282
Time adjusted revenues
282
A non-zero net present value
283
Incentive consideration
284
PVA
286
Cash flow return on investment
286
Planning implications
287
In conclusion: To measure performance
288
Some generalizations regarding compensation
290
Rewarding bad performance
290
Global business aspects
290
Conclusions
290
Problems
291
Discussion question
295
Bibliography
296
16 FLUCTUATING RATES OF OUTPUT
297
A plant limited to one type of equipment and two alternatives
298
Optimum equipment mix
301
More periods or more equipment types
304
Conclusions
305
Problems
305
Bibliography
310
17 INVESTMENT DECISIONS WITH ADDITIONAL INFORMATION
311
The opportunity to replicate
312
The basic model
312
Delaying other investments
315
The winner's curse
316
Conclusions
317
Problems
317
Discussion question
318
Bibliography
318
18 INVESTMENT TIMING
320
Basic principles of when to start and stop a process
321
Growth-type investments
322
Example: The tree farm
325
Equipment replacement
328
The strategy of capacity decisions
329
The basic decision
329
Performance measurement and the timing decision
330
Competitors: Preempting the market
331
Perfect predictions of interest rates
333
Conclusions
334
Problems
334
Discussion question
338
Bibliography
338
19 BUY VERSUS LEASE
339
Borrow or lease: The financing decision
340
A lease is debt
341
Buy or lease with taxes: using the after-tax borrowing rate (method 1)
342
Using a risk-adjusted discount rate (method 2)
345
Computing the implied interest rate on the lease (method 3)
346
Risk considerations in lease-versus-borrow decisions
347
The rate of discount
347
Recommendations
349
Leases and purchase options
349
Importance of terminal value
350
Leveraged leases
352
Cancelable leases
354
The alternative minimum tax
355
Global business aspects
355
Conclusions
355
Problems
356
Discussion question
359
Bibliography 360
Name index 361
Subject index 363


Harold Bierman, Jr., is the Nicholas H. Noyes Professor of Business Administration at the Johnson Graduate School of Management, Cornell University.

Seymour Smidt is Professor Emeritus at the Johnson Graduate School of Management, Cornell University.
Lisainfo e-raamatute kohta Lisainfo e-raamatute kohta
Püsilink: https://www.kriso.ee/db/97813178288392e.html
Märksõnad: