FIN 3104 Study Guide - Final Guide: Pebbles Cereal, Accounts Payable, Opportunity Cost

• School: Virginia Tech
• Department: Finance, Insurance, Business Law
• Course: FIN 3104
• Professor: A J Keown

Document Summary

As a result if building the plant for the product, you will hopefully receive big cash ows; however, currently, you shouldn"t consider what happened in the past. Out interest is the only incremental (or di erential) after-tax cash ows for the company as a whole that are attributable to the proposed investment. The importance of considering incremental cash ows to the company as a whole cannot be overemphasized. Now, substituting the calculations for a project"s change in operating cash into this, we get: Exam question: a project"s free cash ows = 2. 1 calculations: estimate a project"s operating cash flows. Operating cash flow = ebit taxes + depreciation expense where ebit is the net operating income (or pro t). We will no have to calculate ebit on an exam, rather it will be given: calculate a project"s working cash requirements. Increase in accounts receivable + increase in inventories increase in accounts payable.