Risk and return : Basic dimensions of financial decisions

Taxation and cash flows Depreciation, non-cash items and cash flows Treatment of Depreciation and Profit/Loss on Sale/Scrapping of an Asset Financial Cash Flows Cash flows from the point of view of different perspectives

STUDENTS ACTIVITIES

Points to remember Graded illustrations Objective type questions Multiple choice questions Assignments Problems

PAGE

168 168 168 169 171 171 171 172 177 177 179 179

7 CAPITAL BUDGETING - TECHNIQUES OF EVALUATION

Evaluation of Proposals : The Background Capital Budgeting : Techniques of Evaluation Traditional or Non-discounting Techniques - Payback Period - Accounting Rate of Return or Average Rate of Return (ARR) Discounted Cash Flows or Time-Adjusted Techniques - Discounting Procedure : A common ingredient to Discounted cash flow techniques - Net Present Value (NPV) Method - Profitability Index (PI) - Terminal Value (TV) - Discounted Payback Period - Internal Rate of Return (IRR) - Modified Internal Rate of Return Capital Budgeting Decisions : Some Cases Capital Budgeting and Break-Even Analysis Selecting the Appropriate Technique

STUDENTS ACTIVITIES

Points to remember 182 182 182 182 184 186 186 187 189 190 192 192 198 199 206 208 209 209

Graded illustrations

209 Advanced problems on capital budgeting 228 Capital budgeting problems based on block of assets concept 233 Students activities 238 Objective type questions 238 Multiple choice questions 238 Assignments 241 Problems 241

8 CAPITAL BUDGETING - SOME ISSUES

Capital budgeting under capital rationing Single period capital rationing 247 248