Business & Economics - Lecture 6: Limitations and Assumptions of NPV - 11 slides
Explore Lecture 6: Limitations and Assumptions of NPV, covering This lecture delves into the limitations and assumptions inherent in Net Present Value (NPV) calculations, touching on.
Topics Covered
Introduction to the Limitations and Assumptions of NPV
The Role of Forecasting in NPV Analysis
Accuracy of Cash Flow Estimates in NPV Analysis
Choice of Discount Rate: Challenges and Implications
The Impact of Risk and Uncertainty on NPV Reliability
Inflation and Its Effect on NPV
Capital Rationing and NPV Prioritizations
Ranking Projects with NPV: Limitations in Multi-Project Scenarios
Sensitivity Analysis in NPV: Assessing Flexibility
Alternatives to NPV: When It Falls Short
Summary: NPV's Strengths, Shortcomings, and Strategic Role
References
Brealey, R. A., Myers, S. C., & Allen, F. (2020). Principles of Corporate Finance. 13th edn. McGraw Hill.
Damodaran, A. (2012). Investment Valuation: Tools and Techniques for Determining the Value of Any Asset. 3rd edn. Wiley.
Damodaran, A. (2007) Strategic Risk Management. 3rd edn. Hoboken: Wiley.
Sharpe, W.F. (1964) 'Capital Asset Prices: A Theory of Market Equilibrium under Conditions of Risk', Journal of Finance, 19(3), pp. 425-442.
Damodaran, A. (2012) Investment Valuation Tools and Techniques for Determining the Value of Any Asset. 3rd ed. New York: Wiley.
Brealey, R.A., Myers, S.C. and Allen, F. (2020) Principles of Corporate Finance. 13th ed. New York: McGraw-Hill.
Ross, S., Westerfield, R. and Jordan, B. (2018) Fundamentals of Corporate Finance. 12th ed. Boston: McGraw-Hill.
Ross, S.A., Westerfield, R.W., Jaffe, J. (2019) Corporate Finance. 12th edn. New York: McGraw-Hill Education.
Damodaran, A. (2012) Investment Valuation: Tools and Techniques. 3rd edn. Hoboken: John Wiley & Sons.
Crouhy, M., Galai, D., Mark, R. (2014) The Essentials of Risk Management. 2nd ed. New York: McGraw-Hill.
Hull, J. (2020) Options, Futures, and Other Derivatives. 12th edn. Boston: Pearson.
Van Horne, J.C. (2002) Financial Management and Policy. Pearson.