Principles of Corporate Finance
Inflation Example You own a lease that will cost you $8,000 next year, increasing at 3% a year (the forecasted inflation rate) f ...
Inflation Example - nominal figures Year Cash Flow PV @ 10% 1 8000 2 8000x1.03= 8240 8000x1.03 = 8240 8000x1.03 = 8487.20 (^8000 ...
Inflation Example - real figures Year Cash Flow
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% 1 = 7766.99 2 = 7766.99 = 7766.99 = 7766.99 (^8000) 1.03 7766.991.068 ...
IM&C’s Guano Project Revised projections ($1000s) reflecting inflation ...
IM&C’s Guano Project w NPV using nominal cash flows ( ) ( ) ( ) ( ) ( ) ( ) 3 , 519 or $3,519,000 1. 20 3 , 444 1. 20 6 ,^11 ...
IM&C’s Guano Project Cash flow analysis ($1000s) ...
IM&C’s Guano Project Details of cash flow forecast in year 3 ($1000s) ...
IM&C’s Guano Project Tax depreciation allowed under the modified accelerated cost recovery system (MACRS) - (Figures in perc ...
IM&C’s Guano Project Tax Payments ($1000s) ...
IM&C’s Guano Project Revised cash flow analysis ($1000s) ...
Timing w Even projects with positive NPV may be more valuable if deferred. w The actual NPV is then the current value of some fu ...
Timing Example You may harvest a set of trees at anytime over the next 5 years. Given the FV of delaying the harvest, which harv ...
Timing Example - continued You may harvest a set of trees at anytime over the next 5 years. Given the FV of delaying the harvest ...
Timing Example - continued You may harvest a set of trees at anytime over the next 5 years. Given the FV of delaying the harvest ...
Equivalent Annual Cost Equivalent Annual Cost - The cost per period with the same present value as the cost of buying and operat ...
Equivalent Annual Cost Equivalent Annual Cost - The cost per period with the same present value as the cost of buying and operat ...
Equivalent Annual Cost Example Given the following costs of operating two machines and a 6% cost of capital, select the lower co ...
Equivalent Annual Cost Example Given the following costs of operating two machines and a 6% cost of capital, select the lower co ...
Example Given the following costs of operating two machines and a 6% cost of capital, select the lower cost machine using equiva ...
Machinery Replacement Annual operating cost of old machine = 8 Cost of new machine Year: 0 1 2 3 NPV @ 10% 15 5 5 5 27.4 Equival ...
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