Lecture No42-1

Lecture No42-1 - GeneralizedCashFlow ApproachLeaseversusBuy...

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Generalized Cash Flow  Approach – Lease versus Buy Lecture No. 42 Chapter 10 Contemporary Engineering Economics Copyright © 2006
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Generalized Cash Flow  Approach When to Use : When a project does not change a company’s marginal tax rate . Pros : The cash flows can be generated more quickly , and the formatting of the results is less elaborate. There are also analytical advantage in modeling project cash flows. Cons : The process is less intuitive and not commonly understood by business people.
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Setting Up Net Cash Flow Equations
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Presenting Cash Flows in Compact  Tabular Forms Mathematical Form
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Investing activities Operating activities Financing activities Cash Flow Statement for Example 10.4 Using  the generalized Cash Flow Approach
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Example 10.8 Lease-or-Buy Decision Lease Option: The proposed lease term: 60 months The proposed lease payment: $4,202 Buy Option: Your income tax rate: 28% Your sales tax rate: 5% The cost of capital: 8%
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This note was uploaded on 03/11/2010 for the course CEVE 322 taught by Professor Segner during the Spring '10 term at Rice.

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Lecture No42-1 - GeneralizedCashFlow ApproachLeaseversusBuy...

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