Fundamentals of Capital Budgeting Chapter 7 Fundamentals of Capital Budgeting
Forecasting Earnings Indirect Effects on Incremental Earnings Opportunity Costs Project Externalities Common Mistake: The Opportunity Cost of an Idle Asset Sunk Costs and Incremental Earnings Fixed Overhead Expenses Past Research and Development Expenditures
HomeNet’s Incremental Earnings Forecast
The Opportunity Cost of HomeNet’s Lab Space
The Opportunity Cost of HomeNet’s Lab Space
HomeNet’s Incremental Earnings Forecast Including Cannibalization and Lost Rent
Product Adoption and Price Changes
Product Adoption and Price Changes
Determining Free Cash Flow and NPV Calculating the Free Cash Flow from Earnings Capital Expenditures and Depreciation Net Working Capital (NWC) Calculating the NPV Further Adjustments toFree Cash Flow Accelerated Depreciation Liquidation or Salvage Value Terminal or Continuation Value
Net Working Capital
Calculation of HomeNet’s Free Cash Flow (Including Cannibalization and Lost Rent)
HomeNet’s Net Working Capital Requirements
Change in NWC
Net Working Capital with Changing Sales
Free Cash Flow
Free CF – alternative computation
Computing HomeNet’s NPV