Project Cash Flows . 04/25/07 Ch. 9. Investment decision revisited. Acceptable projects are those that yield a return greater than the minimum acceptable hurdle rate with adjustments for project riskiness.
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(Original asset value – salvage value) / number of years to be depreciated
Tax Benefit = Depreciation * Tax Rate
EBIT=Rev – Cost of Goods Sold – SG&A Expenses – Other allocated expenses - Depr.&Amort.
Cash flow to firm = EBIT(1-t) + Depr.&Amort. – Chg in WC – Cap Exp.