Individuals and businesses face large numbers of decisions where it is reasonably feasible to quantify key costs and benefits of a project. This invaluable book enables the decision-maker to make sensible choices when elements of time and risk are present. While other measures can help describe the outcomes, Bierman and Smidt's book focuses on the theme of net present value (NPV), of how it is the most reliable single measure of value, and of how it is important for the users of these tools to understand their limitations. This classic text returns to its roots as a clear and concise introduction to this complex yet essential topic in corporate finance. A new theme of this edition is that of adjusting for uncertainty, and a new chapter exploring the use of Real Options has been added. The book retains it's authority and reputation, and still covers in detail several topics which are under explored by the competition, including: distribuion policy and capital budgeting; firms investing in second firms; investing in current assets. In essence, this easily understandable volume covers the essentials of capital budgeting. It will be of particular interest to practising managers on executive training courses, and its readers will quickly be able to make capital budgeting decisions for corporations of every stripe.
1. Investment Decisions and Corporate Objectives 2. The Time Value of Money 3. Capital Budgeting: The Traditional Solutions 4. Mutually Exclusive Investments 5. Annual Equivalent Costs and Replacement Decisions 6. Capital Budgeting Under Capital Rationing 7. The Use of the Weighted Average Cost of Capital and Other Rates of Discount 8. The Capital Asset Pricing Model 9. The Cost of Capital and Capital Structure 10. Distribution Policy and Capital Budgeting 11. A Firm Investing in a Second Firm 12. Investing in Current Assets 13. Foreign Investment 14. The Buy versus Lease Decision 15. An Introduction to Real Options 16. Capital Budgeting and Inflation 17. Reflection on the Capital Budgeting Decision
