CP

Tax Effects 301 A few young firms, including Dell Computer, have been successful selling their products only over the Internet. ...

302 CHAPTER 8 Cash Flow Estimation and Risk Analysis get assistance from your firm’s accountants and tax lawyers, but even so, y ...

Tax Effects 303 TABLE 8-2 Recovery Allowance Percentage for Personal Property Class of Investment Ownership Year 3-Year 5-Year 7 ...

304 CHAPTER 8 Cash Flow Estimation and Risk Analysis (^2) As a benefit to very small companies, the Tax Code also permits compan ...

Evaluating Capital Budgeting Projects 305 determined by multiplying the depreciable basis by the applicable recovery allowance p ...

306 CHAPTER 8 Cash Flow Estimation and Risk Analysis annual increases or reductions in NOWC must be included when calculating th ...

Evaluating Capital Budgeting Projects 307 Several other points should be noted: (1) RIC is a relatively large corporation, with ...

308 CHAPTER 8 Cash Flow Estimation and Risk Analysis Part 3 estimates the cash flows the firm will realize when it disposes of t ...

Evaluating Capital Budgeting Projects 309 TABLE 8-3 Analysis of a New (Expansion) Project Part 3 expected sale price minus the t ...

310 CHAPTER 8 Cash Flow Estimation and Risk Analysis When the project’s life ends, the company will receive the “Salvage Cash Fl ...

Adjusting for Inflation 311 have been assuming that the project is about as risky as the company’s average proj- ect. If the pro ...

312 CHAPTER 8 Cash Flow Estimation and Risk Analysis For example, if we expected a net cash flow of $100 in Year 5 in the absenc ...

Project Risk Analysis: Techniques for Measuring Stand-Alone Risk 313 The second method involves leaving the cost of capital in i ...

314 CHAPTER 8 Cash Flow Estimation and Risk Analysis assessing a project’s stand-alone risk: (1) sensitivity analysis, (2) scena ...

Project Risk Analysis: Techniques for Measuring Stand-Alone Risk 315 We see, then, that we need to extend sensitivity analysis t ...

316 CHAPTER 8 Cash Flow Estimation and Risk Analysis the combination of a high sales price, low production costs, high first yea ...

Project Risk Analysis: Techniques for Measuring Stand-Alone Risk 317 The standard deviation of the NPV is $69,267 (in thousands ...

318 CHAPTER 8 Cash Flow Estimation and Risk Analysis Finally, the project’s coefficient of variation is: The project’s coefficie ...

Project Risk Analysis: Techniques for Measuring Stand-Alone Risk 319 Then those values are combined, and the project’s NPV is ca ...

320 CHAPTER 8 Cash Flow Estimation and Risk Analysis spreadsheet, Ch 08 Tool Kit Simulation.xls.^9 All three files are included ...