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CHAPTER 12 Cash Flow Estimation and Other Topics in Capital Budgeting [application/vnd.ms-powerpoint]
Content: No. The cost of capital is accounted for by discounting at the 10% WACC, so deducting interest and dividends would be “double counting” financing costs
CHAPTER 12 Cash Flow Estimation and Risk Analysis [application/powerpoint]
Content: No. The cost of capital is accounted for by discounting at the 10% WACC, so deducting interest and dividends would be “double counting” financing costs
CHAPTER 12 Cash Flow Estimation and Risk Analysis [application/vnd.ms-powerpoint]
Content: No. The cost of capital is accounted for by discounting at the 10% WACC, so deducting interest and dividends would be “double counting” financing costs
CHAPTER 11 Cash Flow Estimation and Other Topics in Capital Budgeting
Content: CHAPTER 11 Cash Flow Estimation and Other Topics in Capital Budgeting
CHAPTER 11 Cash Flow Estimation and Risk Analysis [application/vnd.ms-powerpoint]
Content: Yes, by accepting the project, the firm foregoes a possible annual cash flow of $25,000, which is an opportunity cost to be charged to the project
Cash Flow Estimation and Risk Analysis
Content: There may be accruals such as taxes and wages which do not constitute cash flows from the firm during the period in question
Cash Flow Estimation
Content: Only incremental cash flows are relevant to the accept/reject decision
CHAPTER 11 Cash Flow Estimation and Risk Analysis [application/vnd.ms-powerpoint]
Content: If the old machine was sold, the firm would not receive the SV at the end of the machine’s life. This is the opportunity cost for the replacement project
Cash Flow Estimation & Risk Analysis [application/vnd.ms-powerpoint]
Content: The required equipment costs $8M, including shipping and installation. It will depreciate by MACR-5. Producing the new product needs $6M in net operating working capital. All of these costs will be incurred at t=0
Cash flow estimation [application/vnd.ms-powerpoint]
Content: the objective of the cash flow analysis is to make sure that the company has always a sufficient liquidity for its operations
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