Zusammenfassung der Ressource
IA- static methods
- Cost comparison method
- answers to: 1. which project should be realized &
2. what is the optimal replacement time for an
already realized asset
- choose the one with lowest costs!!!
- calculate total costs: variable costs + fixed costs
- depreciation: initial outlay/economic life
- Average tied-up capital: initial outlay/2 (for calculating interest)
- fixed costs= capital costs
- if investment sold after the economic life-
liquidation!!!
- depreciation: (initial outlay - liquidation value)/
economic life
- ATC: (initial outlay + liquidation value)/ 2
- critical quantity =volume of production
which leads to equal costs
- fixed c + variab/unit *x = fixed c. + variab/unit *x
- lower fixed costs = lower costs before critical quantity
- higher fixed costs = lower costs
after critical quantity
- basics
- values represented through
costs and revenues
- average value of a representative
period (not the whole economic life
- time value of money
not considered
- profit comparison method
- target measure: average annual profit
(profit/period)
- average annual profit:
annual revenue - annual total
costs
- absolute profitability =
profit greater than zero
- relative profitable = the one
with the higher profit
- critical quantity of output
- leads an equal profit of both
alternative investment projects
- (revenue/unit- variable cost/unit)* x - fixed costs
= (rev./u-var.cost/u)* x -fixed cost)
- evaluation of the model
- acknowledges the fact of different revenues
- allows individual project evaluations
- impossible to allocate revenues to the projects
- usage of average values is questionable
- investment assessed only
according to the realized
profit
- average rate of return
- target measure is the
average rate of return
- = ((average profit + average interest)/ ATC) *100
- can be used for a single
investment or to compare
- absolute profitability= average rate
of return higher than a given %
- relative profitability= investment leads
to a higher ARR than alternative
investment project
- risk premium!! add to the fixed interest
- static payback period method
- target measure is the time it
takes to recover the capital
invested to the project
- payback period =
initial outlay + (if so)
liquidation value/
average annual cash
flow
- absolute
profitability=
payback period
is shorter than
the target
length of time
- relative profitability= investment
project has a shorter payback
period than alternative investment
project
- result in years!!
- equity financed--> add interest!!!
- profit + depreciation + interest = average annual cash flow)
- debt financed: average
annual cash flow =
profit + depreciation
- evaluation of the model
- advantage:
provides some
indication of the
risk
- disadvantage:
excludes profits
and cash flows after
the payback beriod
- disadvantage: can't be used for
evaluation of long-term assets, difficult
to determine an objective acceptable
payback period