文档介绍：Advanced concepts & frameworks
MBAs and other candidates with business backgrounds, take note - interviewers will expect you to have a more detailed take on your case than an undergraduate would have. Here are monly used case concepts.
Net present value
Perhaps the most important type of pany managers must make on a daily basis is whether to undertake a proposed investment. For example, should pany buy a certain piece of equipment? Build a particular factory? Invest in a new project? These types of decisions are called capital budgeting decisions. The consultant makes such decisions by calculating present value of each proposed investment and making only those investments that have present values.
Example: Hernandez is the CFO of Western Manufacturing Corp., an automobile manufacturer. pany is considering opening a new factory in Ohio that will require an initial investment of $1 million. pany forecasts that the factory will generate after-tax cash flows of $100,000 in Year 1, $200,000 in Year 2, $400,000 in Year 3, and $400,000 in Year 4. At the end of Year 4, pany would then sell the factory for $200,000. pany uses a discount rate of 12 percent. Hernandez must determine whether pany should go ahead and build the factory. To make this decision, Hernandez must calculate present value of the investment. The cash flows associated with the factory are as follows:
Hern