(Capital Investment Decision)

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1.
2.
3.
3.1 (PB)
3.2 (ARR)
3.3 ( NPV)
3.4 (IRR)
3.5 (PI)
2

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1. ( Operating expenditure)

2. ( Capital expenditure)

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1.
2.
3.
4.
5.

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1.

2.

3.

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1.
2.
3.
4.
5.
6.

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1.

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2.
1.
2.

3.
3.1
3.2
3.3
( cost of debt )

( cost of preferred stock)

(cost of common stock )

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= (1-)x100

kd(1-t)

kd
kd(1-t)
t
I
P0
F
n

kd x 100

=
=
=
=
=
=
=

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1.
kd = I
P0

x 100

10

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2.
F-P0
I +
n
kd =
F+P0 x100
2

11

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kp = Dp x 100
Pp

Kp =
Dp =
Pp =

12

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 ()
kc =

D1 + g
P0

x 100

kc =
kr =
D1 = 1
P0 =
g =

13

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()
Ks = n1 + g x 100
Pn

Ks =
N1 =
Pn =
g
=

14

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(Weighted Average Cost of Capital : WACC)

WACC = WdKd(1-t) + WPKP + WCKC+WrKr+WsKs

WACC =
kd =
kp =
kc =
kr =
ks =

15

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1.
1.1. (payback period : PP)
1.2. (Accounting rate of return:ARR)
2.
1 (Net Present Value : NPV)
2 ( Internal Rate of Return : IRR)
3. ( Profit Index : PI)

16

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+ =
P + ( P x k ) = Fn

P =

Fn
(1+k)n

P =
Fn =
k =
n =
8.14
17

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1.
2.
3.
4.
5.

18

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1.

1.
2.

1.
1.
2. 2.

19

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PB =

8.18
20

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ARR = x 100

ARR = x 100
/2
: ARR
8.19

21

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NPV =
:
1. NPV
2. NPV
3. NPV 0

22

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 NPV
1.
NPV = -

8.20

23

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 IRR
: IRR

1. =

IRR = 1000
= 3.333

300
24

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IRR
2.

3.
IRR

25

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 (PI)
PI =

:
PI

PI- = 1208.9 = 1.21

1000
PI = 1065.1
= 1.07
1000

26

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1. 1.
(PB) 2. (NPV) 3.
(ARR) 4.
(IRR) 5. (PI)

PB NPV ARR
IRR PI
1
27

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