《Management Accounting》Chapter 7资本投资决策.ppt

But… DESIGN B: NPV ANALYSIS Year Cash Flow Discount Factor Present Value 0 $-210,000 1.000 $-210,000 1-5 70,000 3.605 252,350 Net present value $ 42,350 DESIGN A: NPV ANALYSIS Year Cash Flow Discount Factor Present Value 0 $-180,000 1.000 $-180,000 1-5 60,000 3.605 216,300 Net present value $ 36,300 NPVA NPVB 2.3 Adjusting Forecast for Inflation Example 11： i=20% i=20%+inflation rate =20% +15% 2.4 After-Tax Operating Cash Flows The Income Approach 利润表法 After-tax cash flow = After-tax net income + Noncash expenses Example 12: Revenues $1,000,000 Less: Operating expenses* 600,000 Income before taxes $ 400,000 Less: Income taxes 136,000 Net income $ 264,000 *$100,000 is depreciation After-tax cash flow = $264,000 + $100,000 = $364,000 After-tax cash revenues = (1 – Tax rate) * Cash revenues After-tax cash expense = (1 – Tax rate) * Cash exp Tax savings (noncash expenses) = (Tax rate) * Noncash exp Total operating cash is equal to the after-tax cash revenues, less the after-tax cash expenses, plus the tax savings on noncash expenses. After-Tax Operating Cash Flows Decomposition Approach 分解法 p570 as Example 12: Revenues= $1,000,000, cash expenses = $500,000, and depreciation = $100,000. Tax rate = 34%. After-tax cash revenues (1 – .34) ($1,000,000) = $660,000 Less: After-tax cash expense (1 – .34)($500,000)= -330,000 Add: Tax savings (noncash exp.) .34 ($100,000) = 34,000 Total $364,000 After-Tax Operating Cash Flows Decomposition Approach 2.5 DepreciationTax-Shielding Effect(节税效果) Depreciation is a non-cash expense and is not a cash flow. Depreciation, however SHIELDs (= protects) revenues from being taxed and, thus, creates a cash inflow equal to the tax savings. Net operating cash flows $300,000 Less: Depreciation 0 Taxable inc