Slide MGT204 Slide06

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McGraw-Hill Ryerson © 2003 McGraw–Hill Ryerson Limited

Corporate Finance

Ross  Westerfield  Jaffe _{Sixth Edition}

6

Chapter Six

Some Alternative

Investment Rules

Prepared by Gady Jacoby

University of Manitoba and

Sebouh Aintablian

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McGraw-Hill Ryerson © 2003 McGraw–Hill Ryerson Limited

Chapter Outline

6.1 Why Use Net Present Value? 6.2 The Payback Period Rule

6.3 The Discounted Payback Period Rule 6.4 The Average Accounting Return

6.5 The Internal Rate of Return

6.6 Problems with the IRR Approach 6.7 The Profitability Index