BU393 Chapter Notes - Chapter 17: Net Present Value, Interest Expense, Tax Shield
Document Summary
Discounted cash flow (dcf) valuation: company valuation technique; similar to a project. Npv calculation; company"s free cash flows are discounted at the wacc; pv of the value of the whole company (debt + equity) Capex: purchases of fixed assets like ppe; capital expenditures. + where net refers to net fixed assets at end of year t (net property, plant, and equipment) Net fixed assets is the aggregate book value of all the company"s assets. Capex is the purchase price of new assets additions to fixed assets. Depreciation expense is related to fixed assets, so model depreciation as function of fixed assets. Declining balance depreciation system: accelerated depreciation system where the aount of depreciation charged to an asset declines over time: amount of depreciation in any period is calculated as the depreciation rate x the book value of an asset. Declining balance system deducts a fixed % of asset"s value each year.
