9BUSI408TR Snively - Capital Investment Decisions

9BUSI408TR Snively - Capital Investment Decisions - BUSI...

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Chip Snively Chip_snively@unc.edu Class 9 BUSI 408 Corporate Finance Fall 2011
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2 HW/Next Class Market Update Capital Investment Decisions Agenda
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3 Read RWJ6 – Making Capital Inv Decisions We’ll review the Baldwin Company analysis from the text in class Homework RWJ6: Q – 1, 2, 4, 5,7, 9-12 P – 2, 3, 5, 9, 10-13 Next Class
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4 Focus is on “incremental” cash flows, and those that are unique to, caused by, or the result of the project We can ignore things that don’t change as a result (although we may include in comparisons for completeness) Much of the effort in the analysis is focusing on turning accounting data into cash flow information This is the “hard” part Capital Investment Decisions
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5 Incremental Cash Flows Cash flows matter—not accounting earnings Incremental cash flows matter Opportunity costs matter Side effects like cannibalism and erosion matter Taxes matter: we want incremental after-tax cash
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This note was uploaded on 02/27/2012 for the course BUSI 407 taught by Professor Bowen during the Spring '11 term at UNC.

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9BUSI408TR Snively - Capital Investment Decisions - BUSI...

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