Topic_10_E2 - Topic 10, Exercise 2 Estimating cash flow...

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Topic 10, Exercise 2 Estimating cash flow factors that will spur U.S. capital spending Capital spending by U.S. businesses in 2002 was flat at a monthly level of approximately $50 billion (see chart provided by BusinessWeek). Based on your cash flow analysis for capital budgeting projects (initial outlay followed by annual net after-tax cash flows discounted at the appropriate risk of the project), answer the following questions. (Think about factors that would impact cash flows and NPV's of capital projects) 1. What economic and financial news headlines would increase project NPV's for U.S. businesses and increase business capital spending? For example, a headline such as "Consumer Spending Expected to Accelerates in Consumer Durables" would likely increase probable cash flows for projects in the durable goods industry. Any headline that would increase expectations of higher future after-tax cash flows from investment projects, lower weighted average cost of capital, and lower initial outlays for
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This note was uploaded on 09/13/2011 for the course FIN 6301 taught by Professor El-asmawanti during the Fall '09 term at University of Texas at Dallas, Richardson.

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Topic_10_E2 - Topic 10, Exercise 2 Estimating cash flow...

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