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statement format involves adding depreciation back
to net profits after taxes and gives the operating
cash inflows associated with the proposed and present projects. The relevant (incremental) cash inflows
are the difference between the operating cash inflows of the proposed project and those of the present project.
LG5 Find the terminal cash flow. The terminal cash
flow represents the after-tax cash flow, exclusive of operating cash inflows, that is expected
from liquidation of a project. It is calculated by
finding the difference between the after-tax proceeds from sale of the new and the old asset at
project termination and then adjusting this difference for any change in net working capital. Sale
price and depreciation data are used to find the
taxes and the after-tax sale proceeds on the new
and old assets. The change in net working capital
typically represents the reversion of any initial net
working capital investment.
LG6 (Solutions in Appendix B)
Book value, taxes, and initial investment Irvi...
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This document was uploaded on 01/19/2014.
- Fall '13