MGFB10H3 Chapter 14: Chapter 14 Notes
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14. 1 general guidelines for capital expenditure analysis: marginal or incremental cash flows additional cash flows that result from budgeting decisions, generated by new projects. Two ways to determine cash flows after capital cost allowance. Cft = cfbtt (1 t) + ccat (t) Ccat = the cca expense for year t, t = the firm"s marginal (or effective) tax rate where cfbtt = cash flow before taxes (i. e. , incremental pre-tax operating income), 9: consider the effect of all project interdependencies on cash flow estimates, treat inflation consistently. This harks back to comparing like with like: discount nominal cash flows with nominal. Ignore intangible considerations. discount rates, and real cash flows with real discount rates: undertake all social investments required by law, estimate the future cash flows associated with potential investments. These cash flows include 3 categories: initial cash flow, the expected annual after-tax cash flows, and the ending cash flow. o o o.