文档介绍：10
Corporate Financial Management 3e
Emery Finnerty Stowe
Capital Budgeting Cash Flows
Learning Objectives
Calculate incremental after-tax cash flows for a capital budgeting project.
Explain the importance and difficulty of incorporating the effects of erosion and enhancement on the firm’s existing operations.
Incorporate the effects of inflation into an NPV calculation.
Explain the importance of using current tax laws.
Calculate equivalent annual annuities and determine optimal asset life and replacement cycles.
Chapter Outline
An Overview of Estimating Cash Flows
Calculating Incremental Cash Flows
An Example of Incremental Cash Flow Analysis
Inflation
A Little More About Taxes
Evaluating Replacement Cycles
Focus on Principles
Incremental Benefits
Identify and estimate the incremental expected after-tax future cash flows for a project.
Time-Value-Of-Money
Measure the value of the project: its NPV.
Risk-Return Trade-Off
Incorporate the risk of a project into its cost of capital.
Focus on Principles
Valuable Ideas
Look for new ideas to use as a basis for capital budgeting projects that will create value.
Comparative Advantage
Look for projects that exploit the firm’parative advantage.
Options
Recognize the options embedded in a capital budgeting project.
Focus on Principles
Two-Sided Transactions
Consider why the party on the other side of the transaction is willing to participate.
Signaling
Consider the actions and products petitors.
An Overview of Estimating Cash Flows
Costs and benefits are measured in terms of cash flow—not e.
Cash flows are incremental (marginal).
The cash flows with the project minus the cash flows without the project.
Cash flows are after tax.
Cash flow timing affects the project’s value.
Financing costs are included in the cost of capital.
Tax Considerations
Taxes and the timing of tax payments significantly affect the incremental cash flows. The relevant tax rate is the firm’s marginal tax