can anyone give me a quick and dirty for a flashcard or point me to the right SS for a quick read? i feel like i’ve missed a few q’s about this- i have no idea what it is about truth be told.
book 4, page. 318
value based metric - think of IRR measures the expected rate of return over avg life of company’s existing assets. inputs for computation with calculator. gross investment (PV) gross cf (PMT) non depr. assets (FV) Avg. life (N) caluculate CRFOI (IRR) page 555, cfai book 4
Goodwill will not be excluded from gross investment… I think that’s the most important point here. gross investment = gross PP&E + the present value of operating lease payments + goodwill and accumulated goodwill amortization.
thx guys! i will take a look at those pages this afternoon and see if i can’t get at least a basic understanding enough to fumble through a few q’s.
gross investment also includes inc. in LIFO reserve, capitalized R&D, restructuring charges, similar to EVA adjustments…