加里森管理会计讲义笔记英文版最新精品GNB16eCH13LectureNotes.docx
- 文档编号:17655871
- 上传时间:2023-07-27
- 格式:DOCX
- 页数:30
- 大小:120.79KB
加里森管理会计讲义笔记英文版最新精品GNB16eCH13LectureNotes.docx
《加里森管理会计讲义笔记英文版最新精品GNB16eCH13LectureNotes.docx》由会员分享,可在线阅读,更多相关《加里森管理会计讲义笔记英文版最新精品GNB16eCH13LectureNotes.docx(30页珍藏版)》请在冰点文库上搜索。
加里森管理会计讲义笔记英文版最新精品GNB16eCH13LectureNotes
Chapter13
LectureNotes
Chaptertheme:
Thetermcapitalbudgetingisusedtodescribehowmanagersplansignificantcashoutlaysonprojectsthathavelong-termimplicationssuchasthepurchaseofnewequipmentandtheintroductionofnewproducts.Thischapterdescribesfourmethodsformakingthesetypesofinvestmentdecisions—thepaybackmethod,thenetpresentvaluemethod,theinternalrateofreturnmethod,andthesimplerateofreturnmethod.
I.Capitalbudgeting–anoverview
A.
Typicalcapitalbudgetingdecisions
i.Capitalbudgetinganalysiscanbeusedforanydecisionthatinvolvesanoutlaynowinordertoobtainsomefuturereturn.Typicalcapitalbudgetingdecisionsinclude:
1.Leaseorbuydecisions.Shouldnewequipmentbeleasedorpurchased?
2.Equipmentselectiondecisions.Whichofseveralavailablemachinesshouldbepurchased?
3.Plantexpansiondecisions.Shouldanewplantorwarehousebepurchasedtoincreasecapacityandsales?
4.Equipmentreplacementdecisions.Shouldoldequipmentbereplacednoworlater?
5.Costreductiondecisions.Shouldnewequipmentbepurchasedtoreducecosts?
B.
Typesofcapitalbudgetingdecisions
i.Therearetwomaintypesofcapitalbudgetingdecisions:
1.Screeningdecisionsrelatetowhetheraproposedprojectpassesapresethurdle.
a.Forexample,acompanymayhaveapolicyofacceptingprojectsonlyiftheypromiseareturnof20%ontheinvestment.
2.Preferencedecisionsrelatetoselectingamongseveralcompetingcoursesofaction.
a.Forexample,acompanymaybeconsideringseveraldifferentmachinestoreplaceanexistingmachineontheassemblyline.
C.Cashflowsversusnetoperatingincome
ii.Thepaybackmethod,thenetpresentvaluemethod,andtheinternalrateofreturnmethodallfocusonanalyzingthecashflowsassociatedwithcapitalinvestmentprojects,whereasthesimplerateofreturnmethodfocusesonincrementalnetoperatingincome.
iii.Examplesofcashoutflowsandcashinflowsthataccompanycapitalinvestmentprojectsareasfollows:
1.
Cashoutflowsincludethoseshownonthisslide.Noticethetermworkingcapital,whichisdefinedascurrentassetslesscurrentliabilities.
2.
Cashinflowsincludethoseshownonthisslide.
HelpfulHint:
Theroleofworkingcapitalincapitalbudgetingoftenconfusesstudents.Emphasizethattheinitialinvestmentinworkingcapitalatthebeginningoftheprojectforitems,suchasinventories,isrecapturedattheendoftheprojectwhenworkingcapitalisnolongerrequired.Thus,workingcapitalisrecognizedasacashoutflowatthebeginningoftheprojectandacashinflowattheendoftheproject.
D.Thetimevalueofmoney
i.Thetimevalueofmoneyconceptrecognizesthatadollartodayisworthmorethanadollarayearfromnow.Therefore,projectsthatpromiseearlierreturnsarepreferabletothosethatpromiselaterreturns.
ii.Thecapitalbudgetingtechniquesthatbestrecognizethetimevalueofmoneyarethosethatinvolvediscountedcashflows(theconceptsofdiscountingcashflowsandusingpresentvaluetablesareexplainedingreaterdetailinAppendix13A).
II.Thepaybackmethod
LearningObjective1:
Determinethepaybackperiodforaninvestment.
A.
Thepaybackmethodfocusesonthepaybackperiod,whichisthelengthoftimethatittakesforaprojecttorecoupitsinitialcostoutofthecashreceiptsthatitgenerates.
i.
Keyconcepts
1.Thepaybackmethodanalyzescashflows;however,itdoesnotconsiderthetimevalueofmoney.
2.Whentheannualnetcashinflowisthesameeveryyear,theformulaforcomputingthepaybackperiodisasshown.
ii.
TheDailyGrind–anexample
1.AssumethemanagementoftheDailyGrindwantstoinstallanespressobarinitsrestaurant.
a.Thecostoftheespressobaris$140,000andithasa10-yearlife.
b.Thebarwillgenerateannualnetcashinflowsof$35,000.
c.Managementrequiresapaybackperiodoffiveyearsorless.
d.Whatisthepaybackperiodontheespressobar?
2.
Thepaybackperiodis4.0years.Accordingtothecompany’scriterion,managementwouldinvestintheespressobar.
3.
QuickCheck–thepaybackmethod
iii.
Evaluationofthepaybackmethod
1.Criticisms
a.Aspreviouslymentioned,thepaybackmethoddoesnotconsiderthetimevalueofmoney.
b.Itignorescashflowsafterthepaybackperiod,thusithasnoinherentmechanismforhighlightingdifferencesinusefullifebetweeninvestments.
c.Ashorterpaybackperioddoesnotalwaysmeanthatoneinvestmentismoredesirablethananother.
HelpfulHint:
Askstudentstochoosebetweentwooptionsthateachrequireaninitialinvestmentof$4,000.OptionAreturns$1,000attheendofeachfouryears;optionBreturns$4,000attheendofthefourthyear.Underthepaybackmethod,optionsAandBareequallypreferable.Note,however,thatoptionAisbetter,sincethecashflowscomeearlier.Nowaddthatinyear5,optionAwillproduceanadditionalcashinflowof$5,000butthatoptionBwillnevergenerateanotherdollarafterthefourthyear.RepeatthequestionofpreferenceofoptionAorBusingonlythepaybackmethod.Thepaybackmethodignoresthetimevalueofmoneyanddoesnotmeasureprofitability;itjustmeasuresthetimerequiredtorecapturetheoriginalinvestment.
2.
Strengths
a.Thepaybackmethodcanserveasascreeningtooltohelpidentifywhichinvestmentproposalsareinthe“ballpark.”
b.Itcanhelpcompaniesthatcompeteinindustrieswhereproductsbecomeobsoleterapidlytoidentifyproductsthatwillrecouptheirinitialinvestmentquickly.
c.Itcanaidcompaniesthatare“cashpoor”inidentifyinginvestmentsthatwillrecoupcashinvestmentsquickly.
iv.Paybackandunevencashflows
1.Whenthecashflowsassociatedwithaninvestmentprojectchangefromyeartoyear,thepaybackformulaintroducedearliercannotbeused.Instead,theun-recoveredinvestmentmustbetrackedyearbyyear.
2.
Forexample,ifaprojectrequiresaninitialinvestmentof$4,000andprovidesunevennetcashinflowsinyears1-5asshown.Theinvestmentwouldbefullyrecoveredinyear4.
III.Thenetpresentvaluemethod
LearningObjective2:
Evaluatetheacceptabilityofaninvestmentprojectusingthenetpresentvaluemethod.
A.
Keyconcepts/assumptions
i.Thenetpresentvaluemethodcomparesthepresentvalueofaproject’scashinflowswiththepresentvalueofitscashoutflows.Thedifferencebetweenthesetwostreamsofcashflowsiscalledthenetpresentvalue.
ii.
Twosimplifyingassumptionsareusuallymadeinnetpresentvalueanalysis:
1.Thefirstassumptionisthatallcashflowsotherthantheinitialinvestmentoccurattheendofperiods.
2.Thesecondassumptionisthatallcashflowsgeneratedbyaninvestmentprojectareimmediatelyreinvestedatarateofreturnequaltothediscountrate.
B.Thenetpresentvaluemethod:
anexampleusingdiscountfactorsfromExhibits13B-1and13B-2
i.AssumetheinformationasshownwithrespecttoLesterCompany.
1.
Alsoassumethatattheendoffiveyearstheworkingcapitalwillbereleasedandmaybeusedelsewhere.
2.LesterCompany’sdiscountrateis11%.
3.Shouldthecontractbeaccepted?
ii.Asastartingpoint,Lester’sannualnetcashinflowfromoperationsof$80,000iscomputedasshown.
iii.
Sincetheinvestmentsinequipment($160,000)andworkingcapital($100,000)occurimmediately,thediscountingfactorusedis1.000.
iv.Thepresentvaluefactorforanannuityof$1forfiveyearsat11%is3.696.Therefore,thepresentvalueoftheannualnetcashinflowsis$295,680.
1.ThepresentvaluefactorsinAppendix3Bareroundedtothreedecimalpoints.
a.
27
AnotherapproachistouseMicrosoftExcel'sNPVfunctiontoperformthesecalculationsusingunroundeddiscountfactors.
2.Further,theindividualannualnetcashinflows($80,000)couldbediscountedusingtherelatedfiveseparate"presentvalueofasinglepaymentof$1"factors.Thatmethodwouldproducethesamepresentvalueof$295,680.
v.Thepresentvaluefactorof$1forthreeyearsat11%is0.731.Therefore,thepresentvalueofthecostofreliningtheequipmentinthreeyearsis$21,930.
vi.Thepresentvaluefactorof$1forfiveyearsat11%is0.593.Therefore,thepresentvalueofthesalvagevalueoftheequipmentis$2,965andthepresentvalueofthereleaseofworkingcapitalis$59,300.
vii.
Thenetpresentvalueoftheinvestmentopportunityis$76,015.
QuickCheck–netpresentvaluecalculations
C.Thenetpresentvaluemethod:
anexampleusingdiscountfactorsfromExhibits13B-1
i.Forthisnextexample,we’llusethesameinformationfromLesterCompany.
1.
Alsoassumethatattheendoffiveyearstheworkingcapitalwillbereleasedandmaybeusedelsewhere.
2.LesterCompany’sdiscountrateis11%.
3.Shouldthecontractbeaccepted?
ii.
Sincetheinvestmentsinequipment($160,000)andworkingcapital($100,000)occurimmediately,thediscountingfactorusedis1.000.
iii.
Thetotalcashflowsforyears1-5arediscountedtotheirpresentvaluesusingthediscountfactorsfromExhibit13B-1.
iv.Forexample,thetotalcashflowsinyear1of$80,000aremultipliedbythediscountfactorof0.901toderivethisfuturecashflow’spresentvalueof$72,080.
v.Asanotherexample,thetotalcashflowsinyear3of$50,000aremultipliedbythediscountfactorof0.731toderivethisfuturecashflow’spresentvalueof$36,550.
vi.
Thenetpresentvalueoftheinvestmentopportunityis$76,015.Noticethisamountequalsthenetpresentvaluefromtheearlierapproach.
D.Thenetpresentvaluemethod:
interpretingtheresults
i.Onceyouhavecomputedanetpresentvalue,youshouldinterpretth
- 配套讲稿:
如PPT文件的首页显示word图标,表示该PPT已包含配套word讲稿。双击word图标可打开word文档。
- 特殊限制:
部分文档作品中含有的国旗、国徽等图片,仅作为作品整体效果示例展示,禁止商用。设计者仅对作品中独创性部分享有著作权。
- 关 键 词:
- 加里 管理 会计 讲义 笔记 英文 最新 精品 GNB16eCH13LectureNotes