2008年注册会计师考试辅导财务成本管理英语 INVESTMENT APPRAISAL对应中文教材2008年财务成本管理第五章:投资管理A.ROCE（已动用资本回报率）or ARR（会计收益率）（Accounting Rate of Return）B.Payback（回收期法）Payback period=Initial payment/Annual cash inflow, payback is not always an exact number of yearsMost common formula:ROCE=EBIT （after depreciation）/ initial capital costsC NPV（净现值法）（1） Basic assumptions:cash outlay occurs in year 0 （now）.cash flows occur at the end of the year.if a cash flow occurs at the beginning of a year, it is assumed to occur at the end of the previous year.D IRR（内含报酬率法）（1）Basic principle: IRR is the cost of capital at which the NPV is zero, if the expected IRR is higher than a target rate of return; the project is financially worth undertaking.（2）Selection between IRR and NPV: when a choice has to be made between mutually exclusive projects, in such case the NPV should be selected, because higher NPV can maximize shareholders wealth.DefinitionThe discount rat which, when applied to the cash flows of a project, gives an NPV of zero.OrThe break-even interest rate for a project.It is the maximum rate of interest that you could afford to pay on a project without making a loss.FeaturesAdvantages -Takes into account the time value of money-Relative measure-More readily understood than NPVDisadvantages -May not be unique projects can have more than one IRR- May rank projects incorrectly for mutually exclusive projects or whenFunds are short supply- Cannot cope with changing rates of interestThe method of calculation depends upon whether or not the project has even cash flows.Even cash flowsConsider an investment of 39.93m that generates net cash earnings of 10m for 5 yearsThe IRR is the discount rate that gives a NPV of zero. This means that the IRR is theRate that will discount five installments of 10m to a present value of 39.93. This in turnMeans that the IRR is the discount rate for which the 5year annuity factor is 3.993. AThe projects IRR has been found via a cumulative discount factor （annuity factor） givenBy: Annuity factorat the IRR=for the life of the projectUneven cash flowsThese have to be found by trial and error or by estimating using two present values.Where:A=lower rate chosen=NPV at rate AB=higher rate=NPV at rate BIt helps to get A and B as close to the true IRR as possible, but it doesnt matter whetherthe resultant NPVs are positive, negative or one of each.Some students prefer to use a common sense approach rather than a formula. Seeing by nowMuch NPV has fallen （fromto） as the discount rate has risen from A to B,They find how much more the discount rate needs to rise to bring the NPV to zero.Whether the formula is used or common sense, the calculation assumes a linear relationshipBetween NPV and discount rate. In fact the relationship is not linear, hence the calculationIs only approximate and （unless you have been lucky when guessing which discount rates touse） you should not quote IRRs calculated in this way to many, not to any,decimal places unless the examiner asks you.IRR of a perpetuityThe present value of a perpetuity is the annual cash flow divided by the discount rate（expressed as a decimal. From this it follows that:the IRR of a perpetuity =100Perpetuity: 永续年金Method of presentationA simple calculation such as those for Woods can be done on a single line. For larger projectstwo possibilities exist:（i） the cash budget approach（ii） the tabular approach.（1）Cash budget approachTime0123000000000000Investment（X） XAdvertising （X） （X） -Working capital （X） -XMaterials （X） （X） （X） -Labour （X） （X） （X）Overheads （X） （X） （X）Revenue X Net cash flow （X） （X） （X） X y% Discount factor1 X X XPresent value （X） （X） （X） XNet present value （000）XThe cash budget approach is suitable for short projects with lots of different cash flowsWhich change from year to year.（2） Tabular approachTimeCash flowy% DiscountPresent value0000000000Investment（X）1（X）0and 1 Advertising （X）X（X）0Working capital （X）1（X）0-9Materials （X）1（X）1-10Labour and overheads （X）X（X）1-10Revenue X XX10Sales proceedsX