FIN 300 Chapter Notes - Chapter 10: Operating Cash Flow, Tax Shield, Cash Flow

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15 Apr 2014
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Lo1 how to determine relevant cash flows for a proposed project. Lo2 how to project cash flows and determine if a project is acceptable. Lo3 how to calculate operating cash flow using alternative methods. Lo4 how to calculate the present value of a tax shield on cca. Lo7 how to evaluate the equivalent annual cost of a project. Lo8 how to set a bid price for a project. Answers to concepts review and critical thinking questions (lo1) an opportunity cost is the most valuable alternative that is foregone if a particular project is undertaken. The relevant opportunity cost is what the asset or input is actually worth today, not, for example, what it cost to acquire. (lo1) it"s probably only a mild over-simplification. The cash portion of current assets will be retrieved. Some receivables won"t be collected, and some inventory will not be sold, of course.

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