第七章 净现值和资本预算

McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.7-0ChapterOutline7.1IncrementalCashFlows7.2TheBaldwinCompany:AnExample7.3InflationandCapitalBudgeting7.4InvestmentsofUnequalLives:TheEquivalentAnnualCostMethod7.5SummaryandConclusionsMcGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.7-17.1IncrementalCashFlows•Cashflowsmatter—notaccountingearnings.•Sunkcostsdon’tmatter.•Incrementalcashflowsmatter.•Opportunitycostsmatter.•Sideeffectslikecannibalismanderosionmatter.•Taxesmatter:wewantincrementalafter-taxcashflows.•Inflationmatters.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.7-2CashFlows—NotAccountingEarnings.•Considerdepreciationexpense.•Youneverwriteacheckmadeoutto“depreciation”.•Muchoftheworkinevaluatingaprojectliesintakingaccountingnumbersandgeneratingcashflows.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.7-3IncrementalCashFlows•Sunkcostsarenotrelevant–Justbecause“wehavecomethisfar”doesnotmeanthatweshouldcontinuetothrowgoodmoneyafterbad.•Opportunitycostsdomatter.JustbecauseaprojecthasapositiveNPVthatdoesnotmeanthatitshouldalsohaveautomaticacceptance.SpecificallyifanotherprojectwithahigherNPVwouldhavetobepassedupweshouldnotproceed.•Sideeffectsmatter.–Erosionandcannibalismarebothbadthings.Ifournewproductcausesexistingcustomerstodemandlessofcurrentproducts,weneedtorecognizethat.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.7-4EstimatingCashFlows•CashFlowsfromOperations–Recallthat:OperatingCashFlow=EBIT–Taxes+Depreciation•NetCapitalSpending–Don’tforgetsalvagevalue(aftertax,ofcourse).•ChangesinNetWorkingCapital–Recallthatwhentheprojectwindsdown,weenjoyareturnofnetworkingcapital.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.7-5InterestExpense•Laterchapterswilldealwiththeimpactthattheamountofdebtthatafirmhasinitscapitalstructurehasonfirmvalue.•Fornow,it’senoughtoassumethatthefirm’slevelofdebt(henceinterestexpense)isindependentoftheprojectathand.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.7-67.2TheBaldwinCompany:AnExampleCostsoftestmarketing(alreadyspent):$250,000.Currentmarketvalueofproposedfactorysite(whichweown):$150,000.Costofbowlingballmachine:$100,000(depreciatedaccordingtoACRS5-yearlife).Increaseinnetworkingcapital:$10,000.Production(inunits)byyearduring5-yearlifeofthemachine:5,000,8,000,12,000,10,000,6,000.Priceduringfirstyearis$20;priceincreases2%peryearthereafter.Productioncostsduringfirstyearare$10perunitandincrease10%peryearthereafter.Annualinflationrate:5%WorkingCapital:initially$10,000changeswithsales.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.7-7TheWorksheetforCashFlowsoftheBaldwinCompanyYear0Year1Year2Year3Year4Year5Investments:(1)Bowlingballmachine–100.0021.76*(2)Accumulated20.0052.0071.2082.7294.24depreciation(3)Adjustedbasisof80.0048.0028.8017.285.76machineafterdepreciation(endofyear)(4)Opportunitycost–150.00150.00(warehouse)(5)Networkingcapital10.0010.0016.3224.9721.220(endofyear)(6)Changeinnet–10.00–6.32–8.653.7521.22workingcapital(7)Totalcashflowof–260.00–6.32–8.653.75192.98investment[(1)+(4)+(6)]*Weassumethattheendingmarketvalueofthecapitalinvestmentatyear5is$30,000.Capitalgainisthedifferencebetweenendingmarketvalueandadjustedbasisofthemachine.Theadjustedbasisistheoriginalpurchasepriceofthemachinelessdepreciation.Thecapitalgainis$24,240(=$30,000–$5,760).WewillassumetheincrementalcorporatetaxforBaldwinonthisprojectis34percent.Capitalgainsarenowtaxedattheordinaryincomerate,sothecapitalgainstaxdueis$8,240[0.34($30,000–$5,760)].Theafter-taxsalvagevalueis$30,000–[0.34($30,000–$5,760)]=21,760.($thousands)(Allcashflowsoccurattheendoftheyear.)McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.7-8TheWorksheetforCashFlowsoftheBaldwinCompanyAttheendoftheproject,thewarehouseisunencumbered,sowecansellitifwewantto.($thousands)(Allcashflowsoccurattheendoftheyear.)Year0Year1Year2Year3Year4Year5Investments:(1)Bowlingballmachine–100.0021.76*(2)Accumulated20.0052.0071.2082.7294.24depreciation(3)Adjustedbasisof80.0048.0028.8017.285.76machineafterdepreciation(endofyear)(4)Opportunitycost–150.00150.00(warehouse)(5)Networkingcapital10.0010.0016.3224.9721.220(endofyear)(6)Changeinnet–10.00–6.32–8.653.7521.22workingcapital(7)Totalcashflowof–260.00–6.32–8.653.75192.98investment[(1)+(4)+(6)]McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.7-9TheWorksheetforCashFlowsoftheBaldwinCompany(continued)Year0Year1Year2Year3Year4Year5Income:(8)SalesRevenues100.00163.00249.72212.20129.90($thousands)(Allcashflowsoccurattheendoftheyear.)Recallthatproduction(inunits)byyearduring5-yearlifeofthemachineisgivenby:(5,000,8,000,12,000,10,000,6,000).Priceduringfirstyearis$20andincreases2%peryearthereafter.Salesrevenueinyear3=12,000×[$20×(1.02)2]=12,000×$20.81=$249,720.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanie