BU393 Chapter Notes - Chapter 10.1-10.2: Current Liability, Tax Shield, Nopat
Document Summary
Not sure if important: when revaluating a company with a new production line , you don"t have to value the whole company twice. Instead you compute the cash flows (costs and revenues) that change because of the new product line: no interest r. Half-year rule: asset purchased pathway through a year depreciated for the remaining fraction of the year, cca make this assumption for all assets bought within a year. Only use half of the regular depreciation rate in the 1st year. Tax: never take tax off the income statement. It needs to be taken off of ebit. Interest is not included tax calculation because it is in the wacc. Expansion projects: replacement project: is a project in which an old asset is replaced by a new asset, expansion project: a new project. There are no old costs and revenues to complicate the analysis.
