chap_09 - Chapter 9 MAKING CAPITAL INVESTMENT DECISIONS...

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Chapter 9 MAKING CAPITAL INVESTMENT DECISIONS SLIDES 9.1 Key Concepts and Skills 9.2 Chapter Outline 9.3 Relevant Cash Flows 9.4 Asking the Right Question 9.5 Common Types of Cash Flows 9.6 Pro Forma Statements and Cash Flow 9.7 Table 9.1 Pro Forma Income Statement 9.8 Table 9.2 Projected Capital Requirements 9.9 Table 9.5 Projected Total Cash Flows 9.10 Making The Decision 9.11 The Tax Shield Approach 9.12 More on NWC 9.13 Depreciation 9.14 Computing Depreciation 9.15 After-tax Salvage 9.16 Example: Depreciation and After-tax Salvage 9.17 Example: Straight-line Depreciation 9.18 Example: Three-year MACRS 9.19 Example: Seven-Year MACRS 9.20 Example: Replacement Problem 9.21 Replacement Problem – Computing Cash Flows 9.22 Replacement Problem – Pro Forma Income Statements 9.23 Replacement Problem – Incremental Capital Spending 9.24 Replacement Problem – Cash Flow From Assets 9.25 Replacement Problem – Analyzing the Cash Flows 9.26 Evaluating NPV Estimates 9.27 Scenario Analysis 9.28 Sensitivity Analysis 9.29 New Project Example 9.30 Summary of Scenario Analysis 9.31 Summary of Sensitivity Analysis 9.32 Making A Decision 9.33 Managerial Options 9.34 Capital Rationing 9.35 Quick Quiz
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A-107 MAKING CAPITAL INVESTMENT DECISIONS CHAPTER ORGANIZATION 9.1 Project Cash Flows: A First Look Relevant Cash Flows The Stand-Alone Principle 9.2 Incremental Cash Flows Sunk Costs Opportunity Costs Side Effects Net Working Capital Financing Costs Other Issues 9.3 Pro Forma Financial Statements and Project Cash Flows Getting Started: Pro Forma Financial Statements Project Cash Flows Projected Total Cash Flow and Value The Tax Shield Approach 9.4 More on Project Cash Flow A Closer Look at Net Working Capital Depreciation An Example: The Majestic Mulch and Compost Company (MMCC) 9.5 Evaluating NPV Estimates The Basic Problem Forecasting Risk Sources of Value 9.6 Scenario and Other What-If Analyses Getting Started Scenario Analysis Sensitivity Analysis 9.7 Additional Considerations in Capital Budgeting Managerial Options and Capital Budgeting Capital Rationing ANNOTATED CHAPTER OUTLINE Slide 9.1 Key Concepts and Skills Slide 9.2 Chapter Outline 9.1. Project Cash Flows: A First Look
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CHAPTER 9 A-108 .A Relevant Cash Flows Relevant cash flows – cash flows that occur (or don’t occur) because a project is undertaken. Cash flows that will occur regardless of whether or not we accept a project aren’t relevant. Incremental cash flows – any and all changes in the firm’s future cash flows that are a direct consequence of taking the project Lecture Tip, page 257: It should be strongly emphasized that a project’s cash flows imply changes in future firm cash flows and, therefore, in the firm’s future financial statements as a result of accepting a project. Below are a few examples of possible projects that would cause the student to consider the nature of an incremental item. 1) The development of a plant on land currently owned by the company versus
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This note was uploaded on 05/01/2009 for the course FINC 106 taught by Professor Dr.nehale during the Spring '09 term at Baptist College of Health Sciences.

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chap_09 - Chapter 9 MAKING CAPITAL INVESTMENT DECISIONS...

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