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Summary of Proposal A The standard deviation = SQRT (14,400,000) = $3,795 The expected cash flow = $5,000 Coefficient of Variation (CV) = $3,795 / $5,000 = 0.759 CV is a measure of relative risk and is the ratio of standard deviation to the mean of the distribution.

14 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 976 | Lượt tải: 0

After Studying Chapter 14, you should be able to: Define the "riskiness" of a capital investment project. Understand how cash-flow riskiness for a particular period is measured, including the concepts of expected value, standard deviation, and coefficient of variation. Describe methods for assessing total project risk, including a probability a...

44 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 988 | Lượt tải: 0

Remember? The Different Methods of Evaluation? Payback Period (PBP) Internal Rate of Return (IRR) Net Present Value (NPV) Profitability Index (PI) Let us use the ‘New Asset’ project from Chapter 12 (VW13E-13b.xlsx)

28 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 1294 | Lượt tải: 0

After Studying Chapter 13, you should be able to: Understand the payback period (PBP) method of project evaluation and selection, including its: (a) calculation; (b) acceptance criterion; (c) advantages and disadvantages; and (d) focus on liquidity rather than profitability. Understand the three major discounted cash flow (DCF) methods of project...

65 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 1149 | Lượt tải: 0

After Studying Chapter 12, you should be able to: Define capital budgeting and identify the steps involved in the capital budgeting process. Explain the procedure to generate long-term project proposals within the firm. Justify why cash, not income, flows are the most relevant to capital budgeting decisions. Summarize in a “checklist” the ma...

34 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 1179 | Lượt tải: 0

After Studying Chapter 11, you should be able to: Understand the sources and types of spontaneous financing. Calculate the annual cost of trade credit when trade discounts are forgone. Explain what is meant by "stretching payables" and understand its potential drawbacks. Describe various types of negotiated (or external) short-term borrowing...

42 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 1337 | Lượt tải: 0

Example of Relaxing Credit Standards The firm is currently producing a single product with variable costs of $20 and selling price of $25. Relaxing credit standards is not expected to affect current customer payment habits. Additional annual credit sales of $120,000 and an average collection period for new accounts of 3 months is expected. The ...

11 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 1011 | Lượt tải: 0

After Studying Chapter 10, you should be able to: List the key factors that can be varied in a firm's credit policy and understand the trade-off between profitability and costs involved. Understand how the level of investment in accounts receivable is affected by the firm's credit policies. Critically evaluate proposed changes in credit policy...

54 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 1467 | Lượt tải: 0

After Studying Chapter 9, you should be able to: List and explain the motives for holding cash. Understand the purpose of efficient cash management. Describe methods for speeding up the collection of accounts receivable and methods for controlling cash disbursements. Differentiate between remote and controlled disbursement, and discuss any et...

60 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 1451 | Lượt tải: 0

After Studying Chapter 8, you should be able to: Explain how the definition of "working capital" differs between financial analysts and accountants. Understand the two fundamental decision issues in working capital management – and the trade-offs involved in making these decisions. Discuss how to determine the optimal level of current assets. ...

26 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 1022 | Lượt tải: 0