Finance 258

The difference between a firm's future cash flows with a project and without the project.

Evaluation of a project based on the project's incremental cash flows (on its own).

To change the firm's overall cash flow today and in the future.

A change in the firm's overall future cash flow that comes about as a direct consequence of the decision to take the project.

Any and all changes in the firm's future cash flows that are a direct consequence of taking the project.

A cost that has already been incurred and cannot be removed and therefore should not be considered in an investment decision.

the most valuable alternative that is given up if a particular investment is undertaken.

the portion of cash flows of a new project that come at the expense of a firm's existing operations

Depreciation method under Canadian tax law allowing for the accelerated write-off of property under various classifications.

1) Cash flows from a new line should be adjusted downwards to reflect lost profits on other lines.

2)Only relevant when the sales would not otherwise be lost.

Do not uncluder interest paid or any other financing costs (dividends, principal repaid).

financial statements projection future years operations.

Project operating cash flow - project additions to NWC - project capital spending

EBIT + depreciation - taxes