Principles of Corporate Finance

Август 2, 2022

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Principles of Corporate Finance

Содержание

2. Topics Covered Sensitivity Analysis Break Even Analysis Monte Carlo Simulation Decision Trees
3. How To Handle Uncertainty Sensitivity Analysis - Analysis of the effects of changes in sales, costs,
4. Sensitivity Analysis Example Given the expected cash flow forecasts for Otobai Company’s Motor Scooter project, listed
5. Sensitivity Analysis Example - continued NPV= 3.43 billion Yen
6. Sensitivity Analysis Example - continued Possible Outcomes
7. Sensitivity Analysis Example - continued NPV Calculations for Optimistic Market Size Scenario NPV= +5.7 bil yen
8. Sensitivity Analysis Example - continued NPV Possibilities (Billions Yen)
9. Break Even Analysis Point at which the NPV=0 is the break even point Otobai Motors has
10. Monte Carlo Simulation Step 1: Modeling the Project Step 2: Specifying Probabilities Step 3: Simulate the
11. Decision Trees 960 (.8) 220(.2) 930(.4) 140(.6) 800(.8) 100(.2) 410(.8) 180(.2) 220(.4) 100(.6) +150(.6) +30(.4) +100(.6)
12. Decision Trees 960 (.8) 220(.2) 930(.4) 140(.6) 800(.8) 100(.2) 410(.8) 180(.2) 220(.4) 100(.6) +150(.6) +30(.4) +100(.6)
13. Decision Trees 960 (.8) 220(.2) 930(.4) 140(.6) 800(.8) 100(.2) 410(.8) 180(.2) 220(.4) 100(.6) +150(.6) +30(.4) +100(.6)
14. Decision Trees 960 (.8) 220(.2) 930(.4) 140(.6) 800(.8) 100(.2) 410(.8) 180(.2) 220(.4) 100(.6) -550 NPV= ?
15. Decision Trees 960 (.8) 220(.2) 930(.4) 140(.6) 800(.8) 100(.2) 410(.8) 180(.2) 220(.4) 100(.6) -550 NPV= ?
16. Decision Trees 960 (.8) 220(.2) 930(.4) 140(.6) 800(.8) 100(.2) 410(.8) 180(.2) 220(.4) 100(.6) 812 456 660
17. Decision Trees 960 (.8) 220(.2) 930(.4) 140(.6) 800(.8) 100(.2) 410(.8) 180(.2) 220(.4) 100(.6) 812 456 660
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Слайд 2

Topics Covered
Sensitivity Analysis
Break Even Analysis
Monte Carlo Simulation
Decision Trees

Слайд 3

How To Handle Uncertainty
Sensitivity Analysis - Analysis of the effects of

changes in sales, costs, etc. on a project.
Scenario Analysis - Project analysis given a particular combination of assumptions.
Simulation Analysis - Estimation of the probabilities of different possible outcomes.
Break Even Analysis - Analysis of the level of sales (or other variable) at which the company breaks even.

Слайд 4

Sensitivity Analysis
Example
Given the expected cash flow forecasts for Otobai Company’s Motor

Scooter project, listed on the next slide, determine the NPV of the project given changes in the cash flow components using a 10% cost of capital. Assume that all variables remain constant, except the one you are changing.

Слайд 5

Sensitivity Analysis
Example - continued
NPV= 3.43 billion Yen

Слайд 6

Sensitivity Analysis
Example - continued
Possible Outcomes

Слайд 7

Sensitivity Analysis
Example - continued
NPV Calculations for Optimistic Market Size Scenario
NPV= +5.7

bil yen

Слайд 8

Sensitivity Analysis
Example - continued
NPV Possibilities (Billions Yen)

Слайд 9

Break Even Analysis
Point at which the NPV=0 is the break even

point
Otobai Motors has a breakeven point of 85,000 units sold.

Sales, 000’s

PV (Yen)
Billions
400
200
19.6

85 200

Break even
NPV=0

PV Inflows

PV Outflows

Слайд 10

Monte Carlo Simulation
Step 1: Modeling the Project
Step 2: Specifying Probabilities
Step 3:

Simulate the Cash Flows

Modeling Process

Слайд 11

Decision Trees
960 (.8)
220(.2)
930(.4)
140(.6)
800(.8)
100(.2)
410(.8)
180(.2)
220(.4)
100(.6)
+150(.6)
+30(.4)
+100(.6)
+50(.4)
-550
NPV= ?
-250
NPV= ?
-150
0
or
Turboprop
Piston

Слайд 12

Decision Trees
960 (.8)
220(.2)
930(.4)
140(.6)
800(.8)
100(.2)
410(.8)
180(.2)
220(.4)
100(.6)
+150(.6)
+30(.4)
+100(.6)
+50(.4)
-550
NPV= ?
-250
NPV= ?
-150
0
or
812
456
660
364
148
Turboprop
Piston

Слайд 13

Decision Trees
960 (.8)
220(.2)
930(.4)
140(.6)
800(.8)
100(.2)
410(.8)
180(.2)
220(.4)
100(.6)
+150(.6)
+30(.4)
+100(.6)
+50(.4)
-550
NPV= ?
-250
NPV= ?
-150
0
or
812
456
660
364
148
Turboprop
Piston

Слайд 14

Decision Trees
960 (.8)
220(.2)
930(.4)
140(.6)
800(.8)
100(.2)
410(.8)
180(.2)
220(.4)
100(.6)
-550
NPV= ?
-250
NPV= ?
-150
0
or
812
456
660
364
148
+150(.6)
+30(.4)
+100(.6)
+50(.4)
*450
331
Turboprop
Piston

Слайд 15

Decision Trees
960 (.8)
220(.2)
930(.4)
140(.6)
800(.8)
100(.2)
410(.8)
180(.2)
220(.4)
100(.6)
-550
NPV= ?
-250
NPV= ?
-150
0
or
812
456
660
364
148
+150(.6)
+30(.4)
+100(.6)
+50(.4)
NPV=444.55
NPV=888.18
NPV=550.00
NPV=184.55
*450
331
Turboprop
Piston

Слайд 16

Decision Trees
960 (.8)
220(.2)
930(.4)
140(.6)
800(.8)
100(.2)
410(.8)
180(.2)
220(.4)
100(.6)
812
456
660
364
148
+150(.6)
710.73
+30(.4)
+100(.6)
403.82
+50(.4)
-150
0
*450
331
or
NPV=444.55
NPV=888.18
NPV=550.00
NPV=184.55
-550
NPV= ?
-250
NPV= ?
Turboprop
Piston

Слайд 17

Decision Trees
960 (.8)
220(.2)
930(.4)
140(.6)
800(.8)
100(.2)
410(.8)
180(.2)
220(.4)
100(.6)
812
456
660
364
148
+150(.6)
710.73
+30(.4)
+100(.6)
403.82
+50(.4)
-550
NPV=96.12
-250
NPV=117.00
-150
0
*450
331
or
NPV=444.55
NPV=888.18
NPV=550.00
NPV=184.55
Turboprop
Piston