Page 42 - Demo

%u062c%u0645%u064a%u0639 %u0627%u0644%u062d%u0642%u0648%u0642 %u0645%u062d%u0641%u0648%u0638%u0629 %u0640 %u0627%u0625%u0644%u0639%u062a%u062f%u0627%u0621 %u0639%u0649%u0644 %u062d%u0642 %u0627%u0645%u0644%u0624%u0644%u0641 42 %u0628%u0627%u0644%u0646%u0633%u062e %u0623%u0648 %u0627%u0644%u0637%u0628%u0627%u0639%u0629 %u064a%u0639%u0631%u0636 %u0641%u0627%u0639%u0644%u0647 %u0644%u0644%u0645%u0633%u0627%u0626%u0644%u0629 %u0627%u0644%u0642%u0627%u0646%u0648%u0646%u064a%u0629Domestic Financial BudgetingA financial budget isthe process of developing a plan to manage fundsto achieve the highest possible return and lowest possible cost over a specific period. Financial budgets include evaluating investment project opportunities or available financing sources to identify the best possible ones. The evaluation process is conducted using various evaluation criteria for money cash inflows and outflows for the various investment and financing opportunities. These criteria help the company to decide whether to accept or reject the available opportunities.One of the best evaluation criteria used in evaluating investment and financing opportunities is the net present value criterion.Net Present Value criteria (NPV)How can you calculate the NPV value?- The first step is to estimate the expected future cash flow.- The second step is to estimate the required return for projects of this risk level.- The third step is to find the present value of the cash flows and subtract theinitial investment.%ud835%udc47%ud835%udc47%ud835%udc36%ud835%udc36%ud835%udc39%ud835%udc39%ud835%udc61%ud835%udc61Where:%ud835%udc41%ud835%udc41%ud835%udc43%ud835%udc43%ud835%udc49%ud835%udc49 = %u2211(1 + %ud835%udc5f%ud835%udc5f)%ud835%udc61%ud835%udc61%u2212 %ud835%udc36%ud835%udc360%ud835%udc61%ud835%udc61=1CFt = expected incremental after-tax cash flow in year t, C0 = initial investment at inception,r= weighted average cost of capital (Discount rate).T = economic life of the opportunity in years.If the NPV is positive, accept the opportunity. A positive NPV means that the opportunity is expected to add value to the firm and will therefore increase the wealth of the owners.