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Capital Budgeting Methods. Agribusiness Finance LESE 306 Fall 2009. Page 67 in booklet. Page 67-68 in booklet. Page 68 in booklet. Present Value Interest Factor (PIF) Table. PIF r,n = (1 + r) -n. Page 68 in booklet. NPV > 0 suggests project is economically feasible - PowerPoint PPT Presentation
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Capital Budgeting MethodsCapital Budgeting Methods
Agribusiness FinanceAgribusiness FinanceLESE 306 Fall 2009LESE 306 Fall 2009
Page 67 in booklet
Page 67-68 in booklet
Page 68 in booklet
Present Value Interest Factor (PIF) Table
PIFr,n = (1 + r) -n
Page 68 in booklet
Page 69 in booklet
NPV > 0 suggests project is economically feasibleNPV = 0 suggests indifferenceNPV < 0 suggests project is economically infeasible
Page 69 in bookletDiscount rate = 5%
Present Value Interest Factor (PIF) Table
PIFr,n = (1 + r) -n
Page 70 in booklet
EPIFr,n = [1 – (1 / (1+ r)n)] / r
Equal Payment Present Value Interest Factor (EPIF) Table
Pages 70-71 in booklet
Page 71 in booklet
Page 71 in booklet
EPIFr,n = [1 – (1 / (1+ r)n)] / r
Equal Payment Present Value Interest Factor (EPIF) Table
Page 71-72 in booklet
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I will come back to this table when we cover pro forma analysis and how to project the values in this table required in investment analysis.
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Page 80 in booklet
Set NPV equal to zero and solve for T, the terminal value.
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Page 82 in booklet
G is the expected rate of appreciation
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Page 83 in booklet
Equal net cash flows
Page 83 in booklet
Capital gainstax rate is 25%
Equal net cash flows
Page 83 in booklet
Capital gainstax rate is 25%
Comparableland values
Equal net cash flows
Page 83 in booklet
Capital gainstax rate is 25%
7% land value appreciation rate
Comparableland values
Equal net cash flows
Page 83 in booklet
Capital gainstax rate is 25%
7% land value appreciation rate
5% discount rate
Comparableland values
Equal net cash flows
Page 83 in booklet
Capital gainstax rate is 25%
7% land value appreciation rate
5% discount rate
Comparableland values
Equal net cash flows
20 year economic life
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