Asif R@yh@n

(Principal of Finance)

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Capital Budgeting Techniques

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PBP = Pay Back Period. PBR = Pay Back Reciprocal. ROI = Return On Investment. ARR = Average Rate Of Return./Accounting Rate Of Return.
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NPV = Net Present Value. IRR = Internal Rate of Return. PI = Profitability Index. NPI = Net Profitability Index. ________________ CFBT = Cash Flow Before Tax. CFAT = Cash Flow After Tax. EBIT = Earning Before Interest & Tax . NCO = Net Cash Outlay . NCB = Net Cash Benefit. DPBP = Discount Pay Back Period. SV = Salvage Value/Scrap Value. SL = Surplus Life. SCF = Surplus Cash Flow. ISCF = Index Of Surplus Cash Flow.
Asif R@yh@n. BBA(Honours). Management Department.

Calculation Table Of Cash Flow CFBT/Cash Inflow From Sales or Service Revenue (-) Depreciation EBT (-) Tax EAT (+) Depreciation NCB/CFAT(Cash Flow After Tax) ******* ******* ******* ******* ******* ******* *******

4=2-3

6=4-5

7=6+3

10=79 11

Year

CFBT Dep. EBT Tax

EAT CFAT/ C.CFAT DF NCB

PV

C.PV

Asif R@yh@n. BBA(Honours) . Management Department. Rangpur Government College.

 m~: PBP ( Pay Back Period ) : cwZ eQi bM` cevn (Cash Flow) mgvb
nj:-

PBP = PBP = A+

cwZ eQi bM` cevn (Cash Flow) Amgvb nj:-

PBR ( Pay Back Reciprocal ):

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PBR =

100 100

cwZ eQi bM` cevn(Cash Flow) Amgvb nj:- PBR =

Income = NCB-Depreciation.

ARR/ROI (Average Rate Of Return/Return On Investment):1. ARR =

= = Net working Capital +

100

2. ROI =

100

Original Investment/NCO = Cost/Investment+Working Capital . Cost = NCO - Working Capital .

Asif R@yh@n. BBA(Honours) Management Department.

Rangpur Government College.

Depreciation =

IRR ( Internal Rate Of Return)/DCF IRR : IRR = A+ (B-A) Here, A= Lower Discount Rate. B = Higher Discount Rate. C = Lower Discount Rate Gi NPV. D = Higher Discount Rate Gi NPV. DF (Discount Factor) :- = Average CFAT = (hw` DF% `qv bv _vK)

NPV ( Net Present Value):NPV = Total PV NCO. PI (Profitability Index):PI = 100

NPI (Net Profitability Index):NPI = PI 100% Or, NPI = 100.

 Di (Discount Factor) :- (Di Factor DF = Here, n = year. Ke = DFGi %

SL (Surplus Life): SL = UL - PBP Here, Ul = Useful Life. SCF (Surplus Cash Flow) : SCF = ( TCF- NCO) + Salvage Value. Here, TCP = CFATUL (Cash Flow mgvb nj ) TCF = CFAT Gi hvMdj (Cash Flow Amgvb nj ) ISCF (Index of Surplus Cash Flow):ISCF =
100

Asif R@yh@n. BBA(Honours) Management Department. Rangpur Government College.

Capital Budgeting Techniques

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ck hw`

A_vr, Depreciation =

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IRR

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Asif R@yh@n. BBA(Honours) Management Department. Rangpur Government College.