公司理财第五版高等院校双语教材·金融系列-chapter 9(PPT 27页).ppt

Chapter 9
Project analysis
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Objectives
Appreciate the practical problems of capital budgeting in large corporations
Use sensitivity, scenario, and break-even analysis to see how project profitability would be affected by an error in your forecasts and to understand why and overestimate of sales is more serious for projects with high operating leverage
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Content
How anize the investment process
Some “what-if” questions
Break-even analysis
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For most large corporations there are two stages in the investment process
The preparation of the capital budget, which is a list of planned investments
The authorization process for individual projects
Capital budgeting is usually a cooperative effort, and this brings with it some challenges
Ensuring that forecasts are consistent
Eliminating conflicts of interest
Reducing forecast bias
Sorting the wheat from the chaff
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Investment projects should never be selected through a purely mechanical process. Managers need to ask why a project should have a positive NPV. A positive NPV is plausible only if pany has petitive advantage that prevents its rivals from stealing most of the gains
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Capital budgeting: 资本预算
Authorization: petitive advantage: 竞争优势
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Content
How anize the investment process
Some “what-if” questions
Break-even analysis
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“what-if” questions ask what will happen to a project in various circumstances
“what-if” analysis is crucial to capital budgeting
“what-if” analysis can help identify the inputs that are most worth refining before mit to a project
“what-if” analysis alerts managers to where the most likely need for adjustments will arise and where to devote the most effort toward contingency planning
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Sensitivity analysis
Sensitivity analysis: analysis of the effects on project profitability of changes in sales, costs, and so on
Fixed costs: costs that d