罗斯《公司理财》第八版 第八章

McGraw-Hill/IrwinCopyright©2007byTheMcGraw-HillCompanies,Inc.Allrightsreserved.MakingCapitalInvestmentDecisionsChapter8McGraw-Hill/IrwinCopyright©2007byTheMcGraw-HillCompanies,Inc.Allrightsreserved.KeyConceptsandSkillsUnderstandhowtodeterminetherelevantcashflowsforvarioustypesofcapitalinvestmentsBeabletocomputedepreciationexpensefortaxpurposesIncorporateinflationintocapitalbudgetingUnderstandthevariousmethodsforcomputingoperatingcashflowApplytheEquivalentAnnualCostapproachMcGraw-Hill/IrwinCopyright©2007byTheMcGraw-HillCompanies,Inc.Allrightsreserved.ChapterOutline8.1IncrementalCashFlows8.2TheBaldwinCompany:AnExample8.3InflationandCapitalBudgeting8.4AlternativeDefinitionsofCashFlow8.5InvestmentsofUnequalLives:TheEquivalentAnnualCostMethodMcGraw-Hill/IrwinCopyright©2007byTheMcGraw-HillCompanies,Inc.Allrightsreserved.8.1IncrementalCashFlowsCashflowsmatter—notaccountingearnings.Sunkcostsdon’tmatter.Incrementalcashflowsmatter.Opportunitycostsmatter.Sideeffectslikecannibalismanderosionmatter.Taxesmatter:wewantincrementalafter-taxcashflows.Inflationmatters.McGraw-Hill/IrwinCopyright©2007byTheMcGraw-HillCompanies,Inc.Allrightsreserved.CashFlows—NotAccountingConsiderdepreciationexpense.Youneverwriteacheckmadeoutto“depreciation.”Muchoftheworkinevaluatingaprojectliesintakingaccountingnumbersandgeneratingcashflows.McGraw-Hill/IrwinCopyright©2007byTheMcGraw-HillCompanies,Inc.Allrightsreserved.IncrementalCashFlowsSunkcostsarenotrelevantJustbecause“wehavecomethisfar”doesnotmeanthatweshouldcontinuetothrowgoodmoneyafterbad.Opportunitycostsdomatter.JustbecauseaprojecthasapositiveNPV,thatdoesnotmeanthatitshouldalsohaveautomaticacceptance.Specifically,ifanotherprojectwithahigherNPVwouldhavetobepassedup,thenweshouldnotproceed.McGraw-Hill/IrwinCopyright©2007byTheMcGraw-HillCompanies,Inc.Allrightsreserved.IncrementalCashFlowsSideeffectsmatter.Erosionandcannibalismarebothbadthings.Ifournewproductcausesexistingcustomerstodemandlessofcurrentproducts,weneedtorecognizethat.If,however,synergiesresultthatcreateincreaseddemandofexistingproducts,wealsoneedtorecognizethat.McGraw-Hill/IrwinCopyright©2007byTheMcGraw-HillCompanies,Inc.Allrightsreserved.EstimatingCashFlowsCashFlowfromOperationsRecallthat:OCF=EBIT–Taxes+DepreciationNetCapitalSpendingDon’tforgetsalvagevalue(aftertax,ofcourse).ChangesinNetWorkingCapitalRecallthatwhentheprojectwindsdown,weenjoyareturnofnetworkingcapital.McGraw-Hill/IrwinCopyright©2007byTheMcGraw-HillCompanies,Inc.Allrightsreserved.InterestExpenseLaterchapterswilldealwiththeimpactthattheamountofdebtthatafirmhasinitscapitalstructurehasonfirmvalue.Fornow,it’senoughtoassumethatthefirm’slevelofdebt(and,hence,interestexpense)isindependentoftheprojectathand.McGraw-Hill/IrwinCopyright©2007byTheMcGraw-HillCompanies,Inc.Allrightsreserved.8.2TheBaldwinCompanyCostsoftestmarketing(alreadyspent):$250,000Currentmarketvalueofproposedfactorysite(whichweown):$150,000Costofbowlingballmachine:$100,000(depreciatedaccordingtoMACRS5-year)Increaseinnetworkingcapital:$10,000Production(inunits)byyearduring5-yearlifeofthemachine:5,000,8,000,12,000,10,000,6,000McGraw-Hill/IrwinCopyright©2007byTheMcGraw-HillCompanies,Inc.Allrightsreserved.TheBaldwinCompanyPriceduringfirstyearis$20;priceincreases2%peryearthereafter.Productioncostsduringfirstyearare$10perunitandincrease10%peryearthereafter.Annualinflationrate:5%WorkingCapital:initial$10,000changeswithsalesMcGraw-Hill/IrwinCopyright©2007byTheMcGraw-HillCompanies,Inc.Allrightsreserved.TheBaldwinCompanyYear0Year1Year2Year3Year4Year5Investments:(1)Bowlingballmachine–100.0021.76*(2)Accumulated20.0052.0071.2082.7294.24depreciation(3)Adjustedbasisof80.0048.0028.8017.285.76machineafterdepreciation(endofyear)(4)Opportunitycost–150.00150.00(warehouse)(5)Networkingcapital10.0010.0016.3224.9721.220(endofyear)(6)Changeinnet–10.00–6.32–8.653.7521.22workingcapital(7)Totalcashflowof–260.00–6.32–8.653.75192.98investment[(1)+(4)+(6)]($thousands)(Allcashflowsoccurattheendoftheyear.)McGraw-Hill/IrwinCopyright©2007byTheMcGraw-HillCompanies,Inc.Allrightsreserved.TheBaldwinCompanyAttheendoftheproject,thewarehouseisunencumbered,sowecansellitifwewantto.Year0Year1Year2Year3Year4Year5Investments:(1)Bowlingballmachine–100.0021.76*(2)Accumulated20.0052.0071.2082.7294.24depreciation(3)Adjustedbasisof80.0048.0028.8017.285.76machineafterdepreciation(endofyear)(4)Opportunitycost–150.00150.00(warehouse)(5)Networkingcapital10.0010.0016.3224.9721.220(endofyear)(6)Changeinnet–10.00–6.32–8.653.7521.22workingcapital(7)Totalcashflowof–260.00–6.32–8.653.75192.98investment[(1)+(4)+(6)]McGraw-Hill/IrwinCopyright©2007byTheMcGraw-HillCompanies,Inc.Allrightsreserved.TheBaldwinCompanyYear0Year1Year2Year3Year4Year5Income:(8)SalesRevenues100.00163.20249.72212.20129.90Recallthatproduction(inunits)byyearduringthe5-yearlifeofthemachineisgivenby:(5,000,8,000,12,000,10,000,6,000).Priceduringthefirstyearis$20andincreases2%peryearthereafter.Salesrevenueinyear3=12,000×[$20×(1.02)2]=12,000×$20.81=$249,720.McGraw-H