The capital budgeting decision: economic analysis of investment projects
Here in its ninth edition, this classic text returns to its roots as a clear and concise introduction to investment decision-making. In this edition, Bierman and Smidt have expanded the theme of adjusting for uncertainty and added a new chapter exploring the use of real options. Retaining the authority and reputation of previous editions, it now covers in depth several under-explored topics, including: distribution policy and capital budgeting; a firm investing in a second firm; investing in current assets. Easily understandable, and covering the essentials of capital budgeting, this book will help readers to make intelligent capital budgeting decisions for corporations of every type. Book jacket.
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Illustrating the Measures of Investment
cash flow methods Internal rate of return
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accept after-tax alternatives amount analysis annual equivalent asset Assume average borrowing calculations capital budgeting cash flows cash outlays cash proceeds chapter CM CM CM common stock consider corporation cost of capital cost of money debarker debt depreciation desirable discount rate dividends dollar earnings effect equal equipment estimate evaluating event example expected monetary value expected return expected value finance firm funds future income tax increase interest rate internal rate investment decisions investment proposals investor lease machine market portfolio ment million mutually exclusive investments obtained OOOOO operating opportunity cost outcomes payback period payments percent plant possible present value present-value factor present-value method probability problem procedure profitable purchase rate of discount rate of interest rate of return reject result risk risk-adjusted salvage value statistically independent stockholders Table tax rate uncertainty unit utility function value of money variance zero