Cash Flow From Assets

Cash Flow From Assets - = Cash Flow From Assets Earnings...

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Cash Flow From Assets There are three components of cash flow in capital budgeting: Operating Cash Flow Net Capital Spending Changes in Net Working Capital Together, these cash flows ALSO represent Cash Flow From Assets . 1
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Cash Flow From Assets Operating Cash Flow - Net Capital Spending - Change in Net Working Capital = Cash Flow From Assets Operating Cash Flow Cash flow from normal business activities (producing and selling). Net Capital Spending The cash flows from investments in long-term assets, including selling the assets at the end of the project. 2
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Operating Cash Flow Operating Cash Flow - Net Capital Spending - Change in Net Working Capital
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Unformatted text preview: = Cash Flow From Assets Earnings Before Interest and Taxes (EBIT) + Depreciation-Taxes s = Operating Cash Flow 3 Operating Cash Flow Example Operating Cash Flow = EBIT + Depreciation Taxes $7,228 + $1,406- $1,347 = $7,287 4 Financing Costs While debt and equity payments are cash outflows, in capital budgeting we include only asset-related cash flows. The financing choices made by the firm are not relevant cash flows. As we will discuss in later chapters, the cost of debt (principal and interest) and equity (dividends) are included in the discount rate . 5...
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This note was uploaded on 01/24/2012 for the course FIN 4260 taught by Professor Victorwakeling during the Spring '12 term at Kennesaw.

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Cash Flow From Assets - = Cash Flow From Assets Earnings...

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