Ch12 - Engineering Economic Analysis 9th Edition Chapter 12...

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Engineering Economic Analysis - Ninth Edition Newnan/Lavelle/Eschenbach Copyright 2004 by Oxford University Press, Inc. 1 Engineering Economic Analysis 9th Edition Chapter 12 INCOME TAXES
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Engineering Economic Analysis - Ninth Edition Newnan/Lavelle/Eschenbach Copyright 2004 by Oxford University Press, Inc. 2 Income Taxes Taxes have an effect on cash flow and affect the investment decisions managers make. Integrating tax considerations into economic analysis requires a thorough understanding of two issues. How the taxes are imposed. How taxes affect the economic analysis techniques.
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Engineering Economic Analysis - Ninth Edition Newnan/Lavelle/Eschenbach Copyright 2004 by Oxford University Press, Inc. 3 Type of tax Income tax based on earnings Property tax based on property value Sales tax based on purchase price Use tax based on type of use of an item Collected by Federal State County City A Partner(s) in the Business For simplicity, the text focuses on either Federal income taxes or bundles the tax into a rate that reflects all taxing entities. This is done as the taxes at the state or local level vary widely.
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Engineering Economic Analysis - Ninth Edition Newnan/Lavelle/Eschenbach Copyright 2004 by Oxford University Press, Inc. 4 Calculation of After-tax Figure of Merit General Process Understand the tax laws affecting the project of interest. Estimate the cash flows without considering the effect of taxes. Adjust the cash flow based on the effects of depreciation and income taxes.
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