Day 10 - Day10:Part1Agenda...

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* Day 10: Part 1 Agenda * Book Group Discussion: Tuesday, July 26 * Book Analysis Papers and Book Group  Discussion Papers due Thursday, July 28 * TA Review Session Today 11:00-12:00 W  308 * Chapter 12: Part 2 Discussion * Break * Mock Example POW #8: Cash Flow for  Grayson Products * Relevant Cash Flows (CFs) Incremental CFs:  additional   cash in minus  additional  cash out. Capital budgeting focuses on  the INCREMENTAL cash flows! 1) Incidental CFs—Consider  * Directly and indirectly related;  “cannibalization” 2) Sunk Costs—Ignore  * Do NOT consider; irrelevant to decision;  irretrievable 3) Opportunity Costs—Consider  * MUST consider; relevant to decision; finite  capacity * Depreciation Expense
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Two Methods: 1) MACRS   [Modified Accelerated Cost Recovery System] * Depreciation = cost x percentage * Cost (i.e. basis)  NEVER  changes * Percentage determined by life (see tax code)
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Day 10 - Day10:Part1Agenda...

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