PresentValueandCapitalBudgeting公司理财罗斯专题课件.ppt

Chapter Outline
Incremental Cash Flows
The Baldwin Company: An Example
The Boeing 777: A Real-World Example
Inflation and Capital Budgeting
Investments of Unequal Lives: The Equivalent Annual Cost Method
Summary and Conclusions
*
RosseChNetPresentValueandCapitalBudgeting公司理财罗斯
*
Incremental Cash Flows
Cash flows matter—not accounting earnings.
Sunk costs don’t matter.
Incremental cash flows matter.
Opportunity costs matter.
Side effects like synergy and erosion matter.
Taxes matter: we want incremental after-tax cash flows.
Inflation matters.
*
RosseChNetPresentValueandCapitalBudgeting公司理财罗斯
*
Cash Flows—Not Accounting Earnings
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.
*
RosseChNetPresentValueandCapitalBudgeting公司理财罗斯
*
Incremental Cash Flows
Sunk costs
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 we should not proceed.
*
RosseChNetPresentValueandCapitalBudgeting公司理财罗斯
*
Incremental Cash Flows
Side effects matter.
Erosion ( If our new product causes existing customers to demand less of current products, we need to recognize that.)
Synergy
*
RosseChNetPresentValueandCapitalBudgeting公司理财罗斯
*
Estimating Cash Flows
Cash Flows from Operations
Recall that:
Operating Cash Flow = EBIT – Taxes + Depreciation
Net Capital Spending
Don’t forget salvage value (after tax, of course).
*
RosseChNetPresentValueandCapitalBudgeting公司理财罗斯
*
Interest Expense
Later 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.