Chapter 9 Outline

9.1 NET PRESENT VALUE

The Basic Idea
Estimating Net Present Value

9.2 THE PAYBACK RULE

Defining the Rule
Analyzing the Payback Rule
Redeeming Qualities of the Rule
Summary of the Rule
The Discounted Payback Rule

9.3 THE AVERAGE ACCOUNTING RETURN

Analyzing the Average Accounting Return Rule

9.4 THE INTERNAL RATE OF RETURN

Problems with the IRR
Redeeming Qualities of the IRR

9.5 THE PROFITABILITY INDEX

9.6 THE PRACTICE OF CAPITAL BUDGETING

9.7 CAPITAL RATIONING

9.8 SUMMARY AND CONCLUSIONS

Independent Learning:
o Key Terms
o Chapter Review Problems and Self-Test
o Concepts Review and Critical Thinking Questions
o Basic Questions (#s 1-18)