Capital Budgeting Methods Agribusiness Finance LESE 306 Fall
Capital Budgeting Methods Agribusiness Finance LESE 306 Fall 2009
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Present Value Interest Factor (PIF) Table PIFr, n = (1 + r) -n
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NPV > 0 suggests project is economically feasible NPV = 0 suggests indifference NPV < 0 suggests project is economically infeasible Page 69 in booklet
Discount rate = 5% Page 69 in booklet
Present Value Interest Factor (PIF) Table PIFr, n = (1 + r) -n
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Equal Payment Present Value Interest Factor (EPIF) Table EPIFr, n = [1 – (1 / (1+ r)n)] / r
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Equal Payment Present Value Interest Factor (EPIF) Table EPIFr, n = [1 – (1 / (1+ r)n)] / r
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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. Page 74 in booklet
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Set NPV equal to zero and solve for T, the terminal value. Page 80 in booklet
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G is the expected rate of appreciation Page 82 in booklet
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Equal net cash flows Page 83 in booklet
Equal net cash flows Capital gains tax rate is 25% Page 83 in booklet
Comparable land values Equal net cash flows Capital gains tax rate is 25% Page 83 in booklet
Comparable land values Equal net cash flows Capital gains tax rate is 25% 7% land value appreciation rate Page 83 in booklet
Comparable land values Equal net cash flows Capital gains tax rate is 25% 7% land value appreciation rate 5% discount rate Page 83 in booklet
Comparable land values Equal net cash flows Capital gains tax rate is 25% 20 year economic life 7% land value appreciation rate 5% discount rate Page 83 in booklet
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- Slides: 43