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Ekrem Tufan
etufan@yahoo.com
Anadolu University
Open Education Faculty Canakkale Office
7. Finansal Ynetim, Semih Bker and et all, 2005. (The main book of our lesson!)
Social responsibility
Ethical responsibility to provide a safe working environment To avoid polluting water and air Produce safe products But social responsibility has a cost If the other firms in its industry do not follow suit, their prices and costs will be lower Most investors do not like to buy socially oriented companies shares.
Pk
i i !1
W CV ! k
Coefficient of variation (CV), standard deviation divided by the expected return
Project classifications
Replacement: Maintenance of business One category consists of expenditures to replace worn-out or damaged equipment used in the production of profitable products.
Should we continue to produce these products or services? Should we continue to use our existing production processes?
Project classifications
Replacement: Cost reduction This category includes expenditures to replace serviceable but obsolete equipment.
The purpose here is to lower the costs of labor, materials, or other inputs such as electricity.
Project classifications
Expansion of existing products or markets
Expenditures to increase output of existing products, or to expand outlets or distribution facilities in markets now being served are included here.
Project classifications
Expansion into new products or markets These are expenditures necessary to produce a new product or to expand into a geographic area not currently being served.
Project classifications
Safety and/or environmental projects Expenditures necessary to comply with government orders, labor agreements, or insurance policy terms fall into this category.
Project classifications
Other project investments This catch all includes office buildings, parking lots, executive aircraft, and so on.
Payback period
Project (S)
Uncovered cost at start of year Payback=Year before full recovery + Cash flow during year 100 Payback Period (S)= 2 + 300 = 2,333 Years
Payback period
Project (L)
200 = 3,333 Years 600
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2
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CFn (1 k ) n
CFt ! (1 k ) t t !0
CF0
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!0
CFt ! !0 t t ! 0 (1 IRR )