公司理财(罗斯)第7章(英文)

公司理财(Forporate Finance)1-10章PPT课件

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CHAPTER

7© 2005 The McGraw-Hill Companies, Inc. All Rights Reserved.

Net Present Value and Capital BudgetingMcGraw-Hill/Irwin Corporate Finance, 7/e

公司理财(Forporate Finance)1-10章PPT课件

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Chapter Outline7.1 Incremental Cash Flows7.2 The Baldwin Company: An Example

7.3 The Boeing 777: A Real-World Example7.4 Inflation and Capital Budgeting

7.5 Investments of Unequal Lives: The Equivalent Annual Cost Method 7.6 Summary and ConclusionsMcGraw-Hill/Irwin Corporate Finance, 7/e © 2005 The McGraw-Hill Companies, Inc. All Rights Reserved.

公司理财(Forporate Finance)1-10章PPT课件

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7.1 Incremental Cash FlowsWe first go over the concept of incremental cash flows. The easiest way to determine whether a cash flow item is incremental is by asking two questions: What will this cash flow be with the project? What will this cash flow be without the project? If the answers differ then this cash flow item is incremental, otherwise, it is irrelevant. 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 McGraw-Hill/Irwin matters. © 2005 The McGraw-Hill Companies, Inc. All Rights Reserved.Corporate Finance, 7/e

公司理财(Forporate Finance)1-10章PPT课件

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Cash Flows—Not Accounting EarningsConsider 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.McGraw-Hill/Irwin Corporate Finance, 7/e

© 2005 The McGraw-Hill Companies, Inc. All Rights Reserved.

公司理财(Forporate Finance)1-10章PPT课件

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Incremental Cash FlowsSunk costs are not relevantA sunk cost is a cost that has already occurred. Because sunk costs are in the past, they cannot be changed by the decision to accept or reject the project. Just because ―we have come this far‖ does not mean that we should continue to throw good money after bad.

McGraw-Hill/Irwin Corporate Finance, 7/e

© 2005 The McGraw-Hill Companies, Inc. All Rights Reserved.

公司理财(Forporate Finance)1-10章PPT课件

7-5

Opportunity costs do matter. If the asset is used in a new project, potential revenues from alternative uses are lost. These lost revenues are called opportunity cost

McGraw-Hill/Irwin Corporate Finance, 7/e

© 2005 The McGraw-Hill Companies, Inc. All Rights Reserved.

公司理财(Forporate Finance)1-10章PPT课件

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Incremental Cash FlowsSide effects matter.Erosion and synergy are both bad things. Erosion is the cash flow transferred to a new project from customers and sales of other products of the firm. If our new product causes existing customers to demand less of current products, we need to recognize that.McGraw-Hill/Irwin Corporate Finance, 7/e © 2005 The McGraw-Hill Companies, Inc. All Rights Reserved.

公司理财(Forporate Finance)1-10章PPT课件

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The Tuft Company is generating cash flow of $333,000 per year. If they invest in a new press, they expect to increase their cash flow to $400,000 per year. The cash outflow for the new press is $250,000; to accept or reject the investment they have to consider the A) press cost of $250

,000 and total cash flow of $400,000 per year. B) press cost of $250,000 and incremental cash flow of $67,000 per year. C) current cash flow of $333,000 and the cost of $250,000 D) opportunity cost of the facility of $333,000. E) None of the above.

McGraw-Hill/Irwin Corporate Finance, 7/e

© 2005 The McGraw-Hill Companies, Inc. All Rights Reserved.

公司理财(Forporate Finance)1-10章PPT课件

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Estimating Cash FlowsCash Flows from OperationsRecall that: Operating Cash Flow = EBIT – Taxes + Depreciation

Net Capital SpendingDon’t forget salvage value (after tax, of course).

Changes in Net Working CapitalRecall that when the project winds down, we enjoy a return of net working capital.McGraw-Hill/Irwin Corporate Finance, 7/e © 2005 The McGraw-Hill Companies, Inc. All Rights Reserved.

公司理财(Forporate Finance)1-10章PPT课件

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Estimating Cash FlowsSometimes the income statement is not available and we can estimate cash flows from operations as follows: Cash flows from operations = After-tax revenues – After-tax costs + Tax Shield from Depreciation Note: Tax Shield from Depreciation = depreciation expense × tax rate Project net after-tax cash flows = Cash flows from operations – Addition to fixed assets – Addition to net working capital =sales-operating costs-taxes-investmentMcGraw-Hill/Irwin Corporate Finance, 7/e © 2005 The McGraw-Hill Companies, Inc. All Rights Reserved.

公司理财(Forporate Finance)1-10章PPT课件

7-10

Interest ExpenseLater chapters will deal with the impact that the amount of debt that a firm has in its capital structure has on firm value. For now, it’s enough to assume that the firm’s level of debt (hence interest expense) is independent of the project at hand.

McGraw-Hill/Irwin Corporate Finance, 7/e

© 2005 The McGraw-Hill Companies, Inc. All Rights Reserved.

公司理财(Forporate Finance)1-10章PPT课件

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7.2 The Baldwin Company: An Example(p180-182)Costs of test marketing (already spent): $250,000. Current market value of proposed factory site (which we own): $150,000. Cost of bowling ball machine: $100,000 (depreciated according to ACRS 5-year life). Production (in units) by year during 5-year life of the machine: 5,000, …… 此处隐藏：7278字，全部文档内容请下载后查看。喜欢就下载吧 ……