class 14 - Class 14 Cash Flow Analysis and Depreciation...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Class 14 Cash Flow Analysis and Depreciation
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Tree Diagram Showing Cash Flow for Industrial Operations C TCI Cash Flow COS Excl. Dep. S D S - COS Excl. Dep . Income Tax: 0.37(Pretax Earnings) After Tax Earnings Pretax Earnings: S - COS Excl. Dep. - D After Tax (Net) Earnings (i.e. ATE) = (1 - 0.37)(S - COS Excl. Dep. - D) Cash Flow = ATE + D = 0.63(S - COS Excl. Dep. ) + 0.37D Typical Year of Operation
Background image of page 2
Cash Flow Before Start-up (during construction which may take 1 to 3 yeas) Cash Flow = - fC TDC - C WC - C land f = fraction of C TDC expended that year Note: C land is usually expended during the first year of construction C WC is usually expended in the final year of construction (just before start-up)
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 4
Cash Flow First Start-up Year (assuming 37% taxes-typical) Cash Flow = ATE + D – C startup – C royal = 0.63(S - COS Excl. Dep. ) + 0.37D – C startup – C royal Note: C royal is lump sum payment if required every year (royalty as part of sales is included in COS)
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Cash Flow Typical Operating Year (assume 37% taxes-typical) Cash Flow = ATE + D– C royal = 0.63(S - COS Excl. Dep. ) + 0.37D - C royal Note: C royal is lump sum payment if required every year (usually not the case) (royalties as part of sales is included in COS)
Background image of page 6
Final Operating Year (assume 37% taxes-typical) Cash Flow = ATE + D – C royal + C WC + S equip = 0.63(S - COS Excl. Dep. ) + 0.37D – C
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/14/2011 for the course CHEN 4520 taught by Professor Wiemer during the Fall '11 term at Colorado.

Page1 / 28

class 14 - Class 14 Cash Flow Analysis and Depreciation...

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online