SlideShare a Scribd company logo
Which one you go for?? ,[object Object]
Presented By N oman A nil   F ahad A dil RISK IN CAPITAL BUDGETING AND TIME VALUE OF MONEY
Investors Main Strategies
 
Simple & Compound Interest ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Future & Present value ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
 
What is Capital Budgeting? ,[object Object]
Purpose…
Planning for Capital Assets
Approaches ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Approaches ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
 
Relevant Risks in Capital Budgeting ,[object Object],[object Object],[object Object]
Stand-Alone Risk ,[object Object],[object Object],[object Object]
Corporate Risk ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Market Risk ,[object Object],[object Object],[object Object],[object Object]
Risk Analysis in Capital Budgeting ,[object Object],[object Object],[object Object]
Scenario Analysis ,[object Object],[object Object]
Examples Scenario   Probability   NPV(000) Worst  0.25 $  15 Base  0.50 82   Best  0.25 148 E(NPV) = $  82  (NPV) =  47 CV(NPV) =   (NPV)/E(NPV) = 0.57 Since CV = 0.57 > 0.4, this project has  high risk .
Simulation Analysis ,[object Object],[object Object]
Example ,[object Object],[object Object],[object Object],[object Object]
 
 
Noman Usman Anil Saleem Fahad Ali Adil Rahman

More Related Content

What's hot

Functions of finance
Functions of financeFunctions of finance
Functions of finance
Rohit Kumar
 
Financial Forecasting & Planning
Financial Forecasting & PlanningFinancial Forecasting & Planning
Financial Forecasting & Planning
tintin_leo
 
Investment Management Risk and Return
Investment Management Risk and ReturnInvestment Management Risk and Return
Investment Management Risk and Return
Dr. John V. Padua
 
Stock Valuation
Stock ValuationStock Valuation
Stock Valuation
Harish Lunani
 
Capital Budgeting Decisions
Capital Budgeting DecisionsCapital Budgeting Decisions
Investment decisions / capital Budgeting
Investment decisions / capital BudgetingInvestment decisions / capital Budgeting
Investment decisions / capital Budgeting
Raghav Jha
 
Cost of capital
Cost of capital   Cost of capital
Cost of capital
BELLARMINDIANA
 
Financial risk management ppt @ mba finance
Financial risk management  ppt @ mba financeFinancial risk management  ppt @ mba finance
Financial risk management ppt @ mba finance
Babasab Patil
 
Accounting rate of return
Accounting rate of returnAccounting rate of return
Accounting rate of return
Kristel Pamela Caluya
 
Capital budgeting
Capital budgetingCapital budgeting
Capital budgeting
N A M COLLEGE KALLIKKANDY
 
Types of risk
Types of riskTypes of risk
Types of risk
MohitAllawadhi
 
The capital budgeting process
The capital budgeting processThe capital budgeting process
The capital budgeting process
Aileen Mae Doroja
 
Capital budgeting
Capital budgetingCapital budgeting
Capital budgeting
Jubayer Alam Shoikat
 
Risk, return, and portfolio theory
Risk, return, and portfolio theoryRisk, return, and portfolio theory
Risk, return, and portfolio theory
Latha Chilukamarri C
 
Receivables management
Receivables management  Receivables management
Receivables management
kinnarry
 
Foreign exchange exposure PPT
Foreign exchange exposure PPTForeign exchange exposure PPT
Foreign exchange exposure PPT
Vijay Mehta
 
Payback period by harikrishnanan
Payback period by harikrishnananPayback period by harikrishnanan
Payback period by harikrishnanan
Hari krishna
 
Cash and marketable securities management
Cash and marketable securities managementCash and marketable securities management
Cash and marketable securities management
Nikhil Soares
 
financial system
financial systemfinancial system
financial system
Vipul Mehta
 
Functions of financial manager
Functions of financial managerFunctions of financial manager
Functions of financial manager
Shristi Giri
 

What's hot (20)

Functions of finance
Functions of financeFunctions of finance
Functions of finance
 
Financial Forecasting & Planning
Financial Forecasting & PlanningFinancial Forecasting & Planning
Financial Forecasting & Planning
 
Investment Management Risk and Return
Investment Management Risk and ReturnInvestment Management Risk and Return
Investment Management Risk and Return
 
Stock Valuation
Stock ValuationStock Valuation
Stock Valuation
 
Capital Budgeting Decisions
Capital Budgeting DecisionsCapital Budgeting Decisions
Capital Budgeting Decisions
 
Investment decisions / capital Budgeting
Investment decisions / capital BudgetingInvestment decisions / capital Budgeting
Investment decisions / capital Budgeting
 
Cost of capital
Cost of capital   Cost of capital
Cost of capital
 
Financial risk management ppt @ mba finance
Financial risk management  ppt @ mba financeFinancial risk management  ppt @ mba finance
Financial risk management ppt @ mba finance
 
Accounting rate of return
Accounting rate of returnAccounting rate of return
Accounting rate of return
 
Capital budgeting
Capital budgetingCapital budgeting
Capital budgeting
 
Types of risk
Types of riskTypes of risk
Types of risk
 
The capital budgeting process
The capital budgeting processThe capital budgeting process
The capital budgeting process
 
Capital budgeting
Capital budgetingCapital budgeting
Capital budgeting
 
Risk, return, and portfolio theory
Risk, return, and portfolio theoryRisk, return, and portfolio theory
Risk, return, and portfolio theory
 
Receivables management
Receivables management  Receivables management
Receivables management
 
Foreign exchange exposure PPT
Foreign exchange exposure PPTForeign exchange exposure PPT
Foreign exchange exposure PPT
 
Payback period by harikrishnanan
Payback period by harikrishnananPayback period by harikrishnanan
Payback period by harikrishnanan
 
Cash and marketable securities management
Cash and marketable securities managementCash and marketable securities management
Cash and marketable securities management
 
financial system
financial systemfinancial system
financial system
 
Functions of financial manager
Functions of financial managerFunctions of financial manager
Functions of financial manager
 

Similar to Risk In Capital Budgeting

Discounted measures
Discounted measures Discounted measures
Discounted measures
Huma Ilyas
 
Npv n other invest cri lec 4
Npv n other invest cri lec 4Npv n other invest cri lec 4
Npv n other invest cri lec 4
University of Balochistan
 
Capital Budgeting
Capital BudgetingCapital Budgeting
Capital Budgeting
CS Ashish Shah
 
Capital investment appraisal.ppt
Capital investment appraisal.pptCapital investment appraisal.ppt
Capital investment appraisal.ppt
DiptimayeeMishra9
 
Chapter8 investmentcriteria
Chapter8 investmentcriteriaChapter8 investmentcriteria
Chapter8 investmentcriteria
AKSHAYA0000
 
NPV is net present value of document.ppt
NPV is net present value of document.pptNPV is net present value of document.ppt
NPV is net present value of document.ppt
SanthoshK757191
 
New Approach to NPV
New Approach to NPVNew Approach to NPV
New Approach to NPV
Sandip De
 
Captial bugting
Captial bugtingCaptial bugting
Captial bugting
3prem
 
Time Value Of Money
Time Value Of MoneyTime Value Of Money
Time Value Of Money
Jasmeena
 
Finanacial anaylsis
Finanacial anaylsisFinanacial anaylsis
Finanacial anaylsis
ANAM ASHFAQ
 
Capital budgeting
Capital budgetingCapital budgeting
Capital budgeting
Shantanu Mishra
 
economy Chapter5_by louy Al hami
economy Chapter5_by louy Al hami economy Chapter5_by louy Al hami
economy Chapter5_by louy Al hami
Louy Alhamy
 
capital budgeting concept meaning and types
capital budgeting concept meaning and typescapital budgeting concept meaning and types
capital budgeting concept meaning and types
DrSurabhiBharti
 
CAPITAL BUDGETING DECISIONS.ppt
CAPITAL BUDGETING DECISIONS.pptCAPITAL BUDGETING DECISIONS.ppt
CAPITAL BUDGETING DECISIONS.ppt
Dr.K.Sivaperumal
 
Relationship between IRR & NPV
Relationship between IRR & NPVRelationship between IRR & NPV
Relationship between IRR & NPV
Zeeshan Ali
 
Lecture cash flow evaluation new
Lecture cash flow evaluation newLecture cash flow evaluation new
Lecture cash flow evaluation new
Bsgr Planmin
 
Lecture cash flow evaluation new
Lecture cash flow evaluation newLecture cash flow evaluation new
Lecture cash flow evaluation new
Bsgr Planmin
 
Cost voulme rofit analysis
Cost voulme rofit analysisCost voulme rofit analysis
Cost voulme rofit analysis
Vanga Srinivas Reddy
 
Class 28 30 (Risk Analysis In Capital Budgeting)
Class 28 30 (Risk Analysis In Capital Budgeting)Class 28 30 (Risk Analysis In Capital Budgeting)
Class 28 30 (Risk Analysis In Capital Budgeting)
Bharti AXA Life Insurance
 
Finanacial anaylsis
Finanacial anaylsisFinanacial anaylsis
Finanacial anaylsis
ANAM ASHFAQ
 

Similar to Risk In Capital Budgeting (20)

Discounted measures
Discounted measures Discounted measures
Discounted measures
 
Npv n other invest cri lec 4
Npv n other invest cri lec 4Npv n other invest cri lec 4
Npv n other invest cri lec 4
 
Capital Budgeting
Capital BudgetingCapital Budgeting
Capital Budgeting
 
Capital investment appraisal.ppt
Capital investment appraisal.pptCapital investment appraisal.ppt
Capital investment appraisal.ppt
 
Chapter8 investmentcriteria
Chapter8 investmentcriteriaChapter8 investmentcriteria
Chapter8 investmentcriteria
 
NPV is net present value of document.ppt
NPV is net present value of document.pptNPV is net present value of document.ppt
NPV is net present value of document.ppt
 
New Approach to NPV
New Approach to NPVNew Approach to NPV
New Approach to NPV
 
Captial bugting
Captial bugtingCaptial bugting
Captial bugting
 
Time Value Of Money
Time Value Of MoneyTime Value Of Money
Time Value Of Money
 
Finanacial anaylsis
Finanacial anaylsisFinanacial anaylsis
Finanacial anaylsis
 
Capital budgeting
Capital budgetingCapital budgeting
Capital budgeting
 
economy Chapter5_by louy Al hami
economy Chapter5_by louy Al hami economy Chapter5_by louy Al hami
economy Chapter5_by louy Al hami
 
capital budgeting concept meaning and types
capital budgeting concept meaning and typescapital budgeting concept meaning and types
capital budgeting concept meaning and types
 
CAPITAL BUDGETING DECISIONS.ppt
CAPITAL BUDGETING DECISIONS.pptCAPITAL BUDGETING DECISIONS.ppt
CAPITAL BUDGETING DECISIONS.ppt
 
Relationship between IRR & NPV
Relationship between IRR & NPVRelationship between IRR & NPV
Relationship between IRR & NPV
 
Lecture cash flow evaluation new
Lecture cash flow evaluation newLecture cash flow evaluation new
Lecture cash flow evaluation new
 
Lecture cash flow evaluation new
Lecture cash flow evaluation newLecture cash flow evaluation new
Lecture cash flow evaluation new
 
Cost voulme rofit analysis
Cost voulme rofit analysisCost voulme rofit analysis
Cost voulme rofit analysis
 
Class 28 30 (Risk Analysis In Capital Budgeting)
Class 28 30 (Risk Analysis In Capital Budgeting)Class 28 30 (Risk Analysis In Capital Budgeting)
Class 28 30 (Risk Analysis In Capital Budgeting)
 
Finanacial anaylsis
Finanacial anaylsisFinanacial anaylsis
Finanacial anaylsis
 

Risk In Capital Budgeting