1;Preface;6 2;Guided Tour of the Book;8 3;Contents;10 4;List of Figures;14 5;Part I: Introduction;17 6;1: Capital Budgeting and Investment Decisions;18 6.1;1.1 Characteristics and Classification of Investment Projects;18 6.2;Key Concept;18 6.3;Key Concept;21 6.4;1.2 Investment Planning and Investment Decisions;21 6.4.1;1.2.1 Investment Planning as Part of the Management Process;21 6.4.2;1.2.2 Investment Planning as Part of the Capital Investment Decision-Making Process;23 6.4.3;1.2.3 Strategic Analysis Tools Supporting the Capital Investment Decision-Making Process;34 6.5;1.3 Investment Appraisal Methods as Tools for Investment Planning;38 6.6;Key Decisions;38 6.7;Further Reading - Part I;40 7;Part II: Basic Methods of Investment Appraisal;42 8;2: Static Methods;43 8.1;Key Concept;43 8.2;2.1 Cost Comparison Method;45 8.3;Key Concept;45 8.4;2.2 Profit Comparison Method;51 8.5;Key Concept;51 8.6;2.3 Average Rate of Return Method;53 8.7;Key Concept;53 8.8;2.4 Static Payback Period Method;56 8.9;Key Concept;56 8.10;Key Concept;56 8.11;Assessment Material;58 8.11.1;Exercise 2.1 (Cost Comparison Method);58 8.11.2;Exercise 2.2 (Cost Comparison Method);59 8.11.3;Exercise 2.3 (Profit Comparison, Average Rate of Return and Payback Method);60 9;3: Discounted Cash Flow Methods;61 9.1;3.1 Introduction;61 9.2;3.2 Net Present Value Method;64 9.3;Key Concept;64 9.4;Key Concept;65 9.5;3.3 Annuity Method;75 9.6;Key Concept;75 9.7;Key Concept;75 9.8;3.4 Internal Rate of Return Method;77 9.9;Key Concept;77 9.10;Key Concept;78 9.11;Key Concept;83 9.12;3.5 Dynamic Payback Period Method;85 9.13;Key Concept;85 9.14;Key Concept;85 9.15;3.6 Data Collection;87 9.16;Assessment Material;93 9.16.1;Exercise 3.1 (Net Present Value Method and Annuity Method);93 9.16.2;Exercise 3.2 (Net Present Value Method and Internal Rate of Return Method);93 9.16.3;Exercise 3.3 (Dynamic Investment Appraisal Methods);94 9.17;Further Reading - Part II;95 10;Part III: Advanced Methods and Applications of Investment Appraisal;98 11;4: Compounded Cash Flow Methods;99 11.1;4.1 Compound Value Method;99 11.2;Key Concept;99 11.3;Key Concept;100 11.4;4.2 Critical Debt Interest Rate Method;104 11.5;Key Concept;104 11.6;Key Concept;104 11.7;4.3 Visualisation of Financial Implications (VoFI) Method;106 11.8;Key Concept;107 11.9;Key Concept;107 11.10;Assessment Material;114 11.10.1;Exercise 4.1 (Compound Value Method, Critical Debt Interest Rate Method and VoFI Method);114 11.10.2;Exercise 4.2 (Dynamic Investment Appraisal Methods);115 12;5: Selected Further Applications of Investment Appraisal Methods;117 12.1;5.1 Income Taxes and Investment Decisions;117 12.1.1;5.1.1 Taxes and the Net Present Value Method;117 12.1.2;5.1.2 Taxes and the Visualisation of Financial Implications (VoFI) Method;122 12.2;5.2 The Assessment of Foreign Direct Investments;124 12.2.1;5.2.1 Special Characteristics of Foreign Direct Investments;124 12.2.2;5.2.2 Net Present Value Model and the Assessment of Foreign Direct Investments;127 12.2.3;5.2.3 The Visualisation of Financial Implications (VoFI) Method and the Assessment of Foreign Investments;133 12.3;5.3 Models for Economic Life and Replacement Time Decisions;137 12.3.1;5.3.1 Overview;137 12.3.2;5.3.2 Optimum Economic Life Without Subsequent Projects;139 12.3.3;Key Concept;139 12.3.4;Key Concept;140 12.3.5;5.3.3 Optimum Economic Life with a Limited Number of Identical Subsequent Projects;142 12.3.6;Key Concept;143 12.3.7;Key Concept;144 12.3.8;5.3.4 Optimum Economic Life with an Unlimited Number of Identical Subsequent Projects;145 12.3.9;Key Concept;146 12.3.10;Key Concept;146 12.3.11;Key Concept;147 12.3.12;5.3.5 Optimum Replacement Time with an Unlimited Number of Identical Subsequent Projects;149 12.3.13;Key Concept;149 12.3.14;Key Concept;150 12.3.15;5.3.6 Optimum Replacement Time with a Limited Number of Non-identical Subsequent Projects;152 12.3.16;Key Concept;153 12.4;5.4 Models to Determine Optimum Investment Timing;155 12.5;Assessment Material;164