Finance Theory — 17.3: Capital Budgeting with NPV скачать в хорошем качестве

Finance Theory — 17.3: Capital Budgeting with NPV

Why does NPV beat IRR, payback period, and profitability index when evaluating projects? This video walks through the Net Present Value framework from first principles — including the often-overlooked detail that different cash flows can carry different discount rates — and demonstrates exactly how shortcut metrics lead to costly mistakes in capital budgeting decisions. Key concepts covered: • The NPV formula with period-specific risk-adjusted discount rates • Step-by-step NPV calculation for a three-year project with varying discount rates (8%, 10%, 12%) • The three inputs to any NPV computation: expected cash flows, timing, and discount rates • NPV decision rules for single projects, multiple independent projects, and mutually exclusive projects • Why IRR fails with scale differences (50% IRR on $100 vs. 25% IRR on $10,000) • Why payback period ignores the time value of money and all post-cutoff cash flows • Why profitability index misleads when comparing mutually exclusive projects of different scale • Value additivity and why accepting all positive-NPV independent projects maximizes firm value • Real options and strategic flexibility: expand, delay, or abandon • The practitioner's five-step checklist for applying NPV in practice • How a CFO choosing Project A (IRR 40%, NPV $50K) over Project B (IRR 18%, NPV $500K) leaves $450K on the table ━━━━━━━━━━━━━━━━━━━━━━━━ SOURCE MATERIALS The source materials for this video are from    • Ses 17: The CAPM and APT III & Capital Bud...