【正文】 As 167。 168(d)(4) of the Federal Ine Tax Code. MACRS Depreciation Rates 18 43 MACRS rates MACRS Depreciation Rates for FiveYear Assets Year Percentage of Cost Allowed 1 % 2 3 4 5 6 18 44 Example for MACRS Method P572 Tax Tax Discount Present Year Depreciation Rate Savings Factor Value 1 $4,000 $1, $1, 2 6,400 2, 2, 3 3,840 1, 1, 4 2,304 5 2,304 6 1,152 i=10% Net present value = $6, 18 45 對照 : StraightLine Depreciation Tax Tax Discount Present Year Depreciation Rate Savings Factor Value 1 $2,000 $ $ 2 4,000 1, 1, 3 4,000 1, 1, 4 4,000 1, 1, 5 4,000 1, 6 2,000 1, Net present value $5, 18 46 How investment is defines? Software, engineering, training and implementation costs are a significant % of the total costs. (Peripheral costs, sideline costs) How operating CFs are estimated? How salvage value is treated? How discount rate is chosen? Others: nonfinancial criteria, Ethics, Postaudit 3. Under the Advanced manufacturing environment (p573) 18 47 How Estimates of Operating Cash Flows Differ? A pany is evaluating a potential investment in a flexible manufacturing system (FMS,靈活制造系統(tǒng) ). The choice is to (1) continue producing with its traditional equipment, expected to last 10 years, or (2) to switch轉(zhuǎn)換 to the new system, which is also expected to have a useful life of 10 years. The pany?s discount rate is 12%. 18 48 每年： FMS* Status quo Investment (current outlay): Direct costs $10,000,000 Software, engineering 8,000,000 Total current outlay支出 $18,000,000 Net aftertax cash flows $ 5,000,000 $1,000,000 Less: Aftertax cash flows for status quo現(xiàn)有系統(tǒng) 1,000,000 n/a Incremental增量的 benefit $ 4,000,000 n/a How Estimates of Operating Cash Flows Differ？ 18 49 INCREMENTAL BENEFIT EXPLAINED解釋 Direct benefits: Direct labor $1,500,000 Scrap廢料 reduction減少 500,000 Setups 生產(chǎn)準(zhǔn)備 200,000 $2,200,000 Intangible benefits (quality 質(zhì)量方面 savings): Rework 返工 $ 200,000 Warranties 售后服務(wù) 400,000 Maintenance of petitive position 1,000,000 1,600,000 Indirect benefits: Production scheduling安排 $ 110,000 Payroll 工資核算 90,000 200,000 Total $4,000,000 18 50 Present value ($4,000,000 * ) $22,600,000 Investment 18,000,000 Net present value $ 4,600,000 But if eliminate intangible and indirect benefits: Present value ($2,200,000 * ) $12,430,000 Investment 18,000,000 Net present value $(5,570,000) How Estimates of Operating Cash Flows Differ？ 18 51 Salvage value is also important. Uncertainty of salvage value could make huge difference. As or the case we mentioned above. * Sensitivity analysis(敏感度分析， whatif analysis) for uncertainty. To chose discount rate: Should be “a firm?s cost of capital 資本成本 ”. () As presented in the previous NPV and IRR interpretations, it can be seen that being overly conservative (過分謹(jǐn)慎 ) with discount rates can prove more damaging 損害 . 18 52 1) The analysis should consider the conditions of nonfinancial information, . … 2) Issues of Ethics: Segment managers may fraud the estimates of operating CFs, maybe for the reasons of petitions, or for pursuing their prospected projects to be proved. 3) Postaudit of capital projects () * Case: * Benefits of a postaudit: ? Whether the resources are used wisely ? Its impact on the behavior of managers. ? More objective results are obtainable. * A postaudit has limitations, and it is costly. Others 18 53 The End Capital Investment Decision