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Investment Decision

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MBA Coorporate Finance Mind Map on Investment Decision, created by Agustin Moreno on 01/04/2015.
Agustin Moreno
Mind Map by Agustin Moreno, updated more than 1 year ago
Agustin Moreno
Created by Agustin Moreno over 9 years ago
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Resource summary

Investment Decision
  1. Steps to analize
    1. Step 1
      1. Forecast cash flows
      2. Step 2
        1. Estimate opportunity cost of capital
        2. Step 3
          1. Discount future cash flows
          2. Step 4
            1. Go ahead if PV of payoff exceeds investment
          3. Risk and Present Value
            1. Rate of Return Rule

              Annotations:

              • Return = (profit / investment)  This rate must be higher than te opportunity cost of capital
            2. Multiple Cash Flows
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