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Unformatted text preview: purposes of control. Count the money instead. If taxes are relevant, be sure to count after tax cash flows. And be sure to take account of taxes only when they are paid, not when they hit the balance sheet. Estimate incremental cash flows: Include all incidental effects Do not confuse average with incremental payoffs Do not forget working capital requirements Ignore sunk costs Include opportunity costs (Storrow Drive in Boston; FDR Drive in NY; places where opportunity costs not considered). Beware of allocated overhead costs (relevance lost, again); talk about Relevance Lost. Save on materials; but it shows up in quality control (or in returns and maintenance)....
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- Fall '10