Incremental Cash Flow=Operating Cash Flow−Incremental Cash Flow on Capital Spending−Incremental Cash Flow on Change in Net Working Capital \begin{aligned} &\text{Incremental Cash Flow}\\ &\quad =\text{Operating Cash Flow}\\ &\quad -\text{Incremental Cash Flow on Capital Spending}\\ &\quad -\text{Incremental Cash Flow on Change in Net Working Capital} \end{aligned}

EBIT approach

先计算 EBIT

Tax Shield approach

OCF=(PQ−FC−VC)(1−Tc)+Dep⋅Tc OCF=(PQ-FC-VC)(1-T_c)+Dep\cdot T_c

例题

Opportunity Cost 相关

Parker & Stone, Inc. is considering building a new manufacturing plant in South Park to produce garden tools. The company purchased land six years ago for $2.8\$2.8 million with the intention of using it as a warehouse and distribution site. However, the company later decided to lease these facilities from a competitor instead. If sold today, the land could generate $3.2\$3.2 million in net proceeds.

The company now plans to build the new manufacturing plant on this land, which will cost $14.3\$14.3 million to construct. Additionally, the site requires $825,000\$825,000 in grading expenses to prepare it for construction.

Question: What is the appropriate cash flow amount to use as the initial investment in fixed assets when evaluating this project? Explain your reasoning.