Professional Documents
Culture Documents
Investmen in Asset
Investmen in Asset
When relevant project cash flows are examined, why is an increase in tax depreciation at
first deducted and then later added back in determining incremental net cash flow for a
period?
2. In capital budgeting, should the following be ignored, or rather added or subtracted from
the new machine’s purchase price when estimating initial cash outflow? When estimating
a. The market value of the old machine is $500, the old machine has a remaining useful
3. In determining the expected cash flows from a new investment project, why should past
4. Discuss the adjustments in the capital budgeting process that should be made to compensate for
expected inflation.
5. What is the purpose of requiring more levels of management approval, the larger the
request?
investment?