# Master Formula List Ch.14

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Chapter Fourteen: Cash Flow Estimation and Capital Budgeting Decisions Equation Formula Pa [14-1] Initial Cash Outlay CF 0 = C 0 + Δ NWC 0 + OC p. [14-2] Annual After-Tax Cash Flows CF t = CFBT t (1 − Τ ) + CCA t ( T ) p. [14-3] Ending Cash Flow (with tax implications) ECF (with tax implications) n = SV n + Δ NWC n − [( SV n − C 0 ) × T ] − [( SV n UCC n ) × T ] p. [14-4] Ending Cash Flow (ignoring tax implications) ECF n = SV n + Δ NWC n p. [14-5] Net Present Value NPV = PV ( Annual CFs ) + PV ( ECF n ) − CF 0 p. [14-6] Present Value of Operating Cash Flows n 1 1- 1+k PV OperatingCash Flows =CFBT 1-T × k p. [14-7] Present Value of CCA Tax Shield (ignoring CCA Recapture and Terminal Loss)         0 n n C d T 1+0.5k SV d T 1 PV CCATaxShield = × - × d+k 1+k d+k 1+k p. [14-8] Present Value of CCA Tax Shield (accounting for CCA Recapture or Terminal Loss)           0 n n n n n C d T 1+0.5k UCC d T SV -UCC T 1 PV CCATaxShield = × - × - d+k 1+k d+k 1+k 1+k p. [14-9] Present Value of Capital Gains Taxes Paid   n 0 n SV -C T PV CapitalGainsTaxesPaid = 1+k p. [14-10] Net Present Value (Components) NPV = PV(Operating CFs) + PV(CCA Tax Shield) + PV(ECF n ) PV (Capital Gains Taxes Paid) CF 0 p.