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繼續練速寫。

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今天終於出夜蘭啦~
而且很歐的完全沒歪
五萬顆石頭
總共抽出夜蘭命三
與若水精一
運氣真好~！

稍微的筆記

CFA ch32 Capital budgeting

Categories of Capital budgeting Projects:

• 1. Replacement projects to maintain the business: whether the existing operations should continue. (not detailed)
• 2. Replacement projects for cost reduction. (detailed)
• 3. Expansion projects. (detailed)
• 4. New product or market development. (detailed)
• 5. Mandatory projects: involve safety-related or environmental concerns, and generating little revenue.
• 6. Other projects: not easily analyzed or high-risk. (e.g. R&D)

Capital budgeting Principles:

• 1. Decisions are based on cash flow, not accounting income.
     <1> Sunk costs: costs cannot be avoided even if the project isn’t undertaken.
     <2> Externalities: effects after the acceptance of a project.
     <3> Cannibalization: negative externality.
     <4> Conventional cash flow pattern: sign on the cash flows change only once.
     -> Unconventional cash flow pattern may cause multiple IRR or no IRR problems because the project has cash outflows during its life.
• 2. Cash flows are based on opportunity costs.
• 3. The timing of cash flows is important.
• 4. Cash flows are analyzed on an after-tax basis: The impact of taxes must be considered.
• 5. Financing costs are reflected in the project’s required rate of return.

Affect

• Mutually exclusive: can accept either A or B, but not both.
• Project Sequencing: projects must be undertaken in certain order.
• Unlimited funds: can undertake all projects with expected return \(\geq\) cost of capital.
• Capital rationing: have constraints on the amount of capital.

NPV

• NPV: sum of PV of all the expected incremental cash flows.
• IRR: the discount rate that makes \(NPV=0\).
• IRR decision rule:
  If \(IRR>\) The required rate of return (or we can say firm’s cost of capital.)
  -> Accept the project.
• hurdle rate: The minimum IRR that a firm requires for a project to be accepted.
• The NPV method assumes that a project’s cash flows will be reinvested at the cost of capital, while IRR method assumes they will be reinvested at the IRR.
• If NPV and IRR methods give conflicting decisions for mutually exclusive projects, the NPV decision should be used to select the project.

Payback Period

• Payback period (PBP): number of years it takes to recover the initial cost of an investment.
• Discounted payback period: number of years it takes to recover the initial cost of an investment in PV terms.
• Profitability Index (PI): \(PI=\dfrac{PV\space of\space future\space cash\space flows}{CF_0}=1+\dfrac{NPV}{CF_0}\)

今日其他進度：

• 日文N1文法、N1題目
• CFA ch32
• 一堆的動畫

我會繼續努力的。