Topic 10(Chapter 8)Cash Flow Estimation and Risk Analysis 8章 财务管理英文版教学课件 大学二年级下学期用.ppt

Relevant cash flows Working capital treatment Inflation Risk Analysis: Sensitivity Analysis, Scenario Analysis, and Simulation Analysis What effect did the expansion have on net operating working capital (NOWC)? NOWC08 = ($7,282 + $632,160 + $1,287,360) - ($524,160 + $489,600) = $913,042. NOWC07 = $793,800. What effect did the expansion have on capital used in operations? = NOWC + Net fixed assets. = $913,042 + $939,790 = $1,852,832. = $1,138,600. Did the expansion create additional net operating profit after taxes (NOPAT)? NOPAT = EBIT(1 - Tax rate) NOPAT08 = -$690,560(1 - 0.4) = -$690,560(0.6) = -$414,336. NOPAT07 = $125,460. What is your initial assessment of the expansion’s effect on operations? 2008 2007 Sales $5,834,400 $3,432,000 NOPAT ($414,336) $125,460 NOWC $913,042 $793,800 Operating capital $1,852,832 $1,138,600 What was the free cash flow (FCF)for 2008? FCF = NOPAT - Net capital investment = -$414,336 - ($1,852,832 - $1,138,600) = -$414,336 - $714,232 = -$1,128,568. How do you suppose investors reacted? Cost: $200,000 + $10,000 shipping + $30,000 installation. Depreciable cost $240,000. Inventories will rise by $25,000 and payables will rise by $5,000. Economic life = 4 years. Salvage value = $25,000. MACRS 3-year class. Incremental gross sales = $250,000. Incremental cash operating costs = $125,000. Tax rate = 40%. Overall cost of capital = 10%. = Corporate cash flow with project minus Corporate cash flow without project NO. The costs of capital are already incorporated in the analysis since we use them in discounting. If we included them as cash flows, we would be double counting capital costs. NO. This is a sunk cost. Focus on incremental investment and operating cash flows. Yes. Accepting the project means we will not receive the $25,000. This is an opportunity cost and it should be charged to the project. A.T. opportun