罗斯《公司理财》第八版第八章.pptVIP

Making Capital Investment Decisions Key Concepts and Skills Understand how to determine the relevant cash flows for various types of capital investments Be able to compute depreciation expense for tax purposes Incorporate inflation into capital budgeting Understand the various methods for computing operating cash flow Apply the Equivalent Annual Cost approach Chapter Outline 8.1 Incremental Cash Flows 8.2 The Baldwin Company: An Example 8.3 Inflation and Capital Budgeting 8.4 Alternative Definitions of Cash Flow 8.5 Investments of Unequal Lives: The Equivalent Annual Cost Method 8.1 Incremental Cash Flows Cash flows matter—not accounting earnings. Sunk costs don’t matter. Incremental cash flows matter. Opportunity costs matter. Side effects like cannibalism and erosion matter. Taxes matter: we want incremental after-tax cash flows. Inflation matters. Cash Flows—Not Accounting Consider depreciation expense. You never write a check made out to “depreciation.” Much of the work in evaluating a project lies in taking accounting numbers and generating cash flows. Incremental Cash Flows Sunk costs are not relevant Just because “we have come this far” does not mean that we should continue to throw good money after bad. Opportunity costs do matter. Just because a project has a positive NPV, that does not mean that it should also have automatic acceptance. Specifically, if another project with a higher NPV would have to be passed up, then we should not proceed. Incremental Cash Flows Side effects matter. Erosion and cannibalism are both bad things. If our new product causes existing customers to demand less of current products, we need to recognize that. If, however, synergies result that create increased demand of existing products, we also need to recognize that. Estimating Cash Flows Cash Flow from Operations Recall that: OCF = EBIT – Taxes + Depreciation Net Capital Spending Don’t forget salvage value (after tax, of course). Changes in Net Working Capital Recall th