Flow if the answer is yes it should be included in

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Unformatted text preview: s “yes”, it should be included in the If analysis because it is incremental analysis If the answer is “no”, it should not be included in the If analysis because it will occur anyway analysis If the answer is “part of it”, then we should include If the part that occurs because of the project the 5 Common Types of Cash Flows Sunk costs – costs that have accrued in the past Opportunity costs – costs of lost options Side effects Positive side effects – benefits to other projects Negative side effects – costs to other projects Changes in net working capital Financing costs Taxes 6 Pro Forma Statements and Pro Cash Flow Cash Capital budgeting relies heavily on pro forma Capital accounting statements, particularly income statements statements Computing cash flows – refresher Operating Cash Flow (OCF) = EBIT + depreciation – Operating taxes taxes OCF = Net income + depreciation when there is no OCF interest expense interest Cash Flow From Assets (CFFA) = OCF – net capital Cash spending (NCS) – changes in NWC spending 7 Table 10.1 Pro Forma...
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