Principles of Managerial Finance

362 PART 3 Long-Term Investment Decisions opportunity costs Cash flows that could be realized from the best alternative use of a ...

CHAPTER 8 Capital Budgeting Cash Flows 363 In Practice AsCoors Brewing Companygrew from a local brewer to the number- 3 national ...

364 PART 3 Long-Term Investment Decisions foreign direct investment The transfer of capital, manager- ial, and technical assets ...

CHAPTER 8 Capital Budgeting Cash Flows 365 installation costs Any added costs that are necessary to place an asset into operatio ...

366 PART 3 Long-Term Investment Decisions TABLE 8.3 Tax Treatment on Sales of Assets Form of taxable income Definition Tax treat ...

CHAPTER 8 Capital Budgeting Cash Flows 367 recaptured depreciation The portion of an asset’s sale price that is above its book v ...

368 PART 3 Long-Term Investment Decisions FIGURE 8.5 Taxable Income from Sale of Asset Taxable income from sale of asset at vari ...

CHAPTER 8 Capital Budgeting Cash Flows 369 When changes in net working capital apply to the initial investment associated with ...

370 PART 3 Long-Term Investment Decisions EXAMPLE Powell Corporation, a large, diversified manufacturer of aircraft components, ...

CHAPTER 8 Capital Budgeting Cash Flows 371 TABLE 8.5 Powell Corporation’s Revenue and Expenses (Excluding Depreciation) for Prop ...

372 PART 3 Long-Term Investment Decisions TABLE 8.6 Depreciation Expense for Proposed and Present Machines for Powell Corporatio ...

CHAPTER 8 Capital Budgeting Cash Flows 373 TABLE 8.7 Calculation of Operating Cash Inflows Using the Income Statement Format Rev ...

374 PART 3 Long-Term Investment Decisions TABLE 8.9 Incremental (Relevant) Operating Cash Inflows for Powell Corporation Operati ...

CHAPTER 8 Capital Budgeting Cash Flows 375 D 3 $76,000$12,000$64,000 T0.40 Substituting into the equation yields ICI 3 [$5 ...

376 PART 3 Long-Term Investment Decisions As noted earlier, the change in net working capital is for convenience assumed to occ ...

CHAPTER 8 Capital Budgeting Cash Flows 377 Time line for Powell Corporation’s relevant cash flows with the proposed machine 0 $2 ...

378 PART 3 Long-Term Investment Decisions Techniques for analyzing conventional cash flow patterns to determine whether to under ...

CHAPTER 8 Capital Budgeting Cash Flows 379 the accept–reject approach and the ranking ap- proach. Conventional cash flow pattern ...

380 PART 3 Long-Term Investment Decisions LG4 LG5 LG6 LG1 ordinary income and capital gains. (Table 3.2 on page 100 contains the ...

CHAPTER 8 Capital Budgeting Cash Flows 381 LG2 LG3 8–2 Basic terminology A firm is considering the following three separate situ ...