FIN 302 Lecture Notes - Lecture 7: Decision Points, New Product Development, Net Present Value

• School: U of M
• Department: Finance
• Course: FIN 302
• Professor: Denis Sosyura

Document Summary

Intuition: project inflows are netted against project outflows in present value terms. Npv = pv cash inflows - pv cash outflows. Net present value (npv) & profitability index (pi) Mutually exclusive projects: select the project with the maximum npv. Cash outflows: investments in acquisition and retention. Net - cash inflows vs outflows expressed in pv terms. Present - pv terms (the inflows and the outflows) Value - total value added to the company after undertaking the project. Independent projects: projects if you can implement all of the projects in any combination. Mutually exclusive: you cannot do them at the same time. Uofm vs ohio state - you are signing on to one and not the other. Course selection - you can"t double enroll for the same time frame. Customer lifetime value - bank small bonus for opening a bank account there - the purpose is to gain you as a long-term client (acquire a customer base) - customer acquisition cost.