1. Discounted Cash Flow Techniques CHAPTER 7 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

6. TABLE 7-1 Cash Flows for Container-Loading Pier ($ millions)

7. FIGURE 7-1 Cash Flow Diagram for Container-Loading Pier

13. Calculator Conventions FV PMT PV 1 2 3 4 … n 0 …

14. n i PV PMT FV Input: 4 15 ? 2 -- Output: -5.71 Using a Calculator to Find the Present Value of a $2 million, 4-year Annuity, Discounted at 15%

16. $5,710,000 Today is Equivalent to $2 million a Year for 4 Years When the Interest Rate is 15 %

19. TABLE 7-2 NPV of Container Pier at Different Discount Rates

20. FIGURE 7-2 NPV of Container Pier at Different Discount Rates

21. TABLE 7-3 Calculating Container Pier’s Estimated NPV, IRR, and BCR with a Computer Spreadsheet

31. TABLE 7-4 Division Financial Analysis of New Line of Cellular Telephones ($ millions)

34. The Two-Step Treatment of Depreciation when Calculating Aftertax Cash Flow (ATCF)

36. Calculating the Investment in Working Capital Note error in line 3, period 4

42. TABLE 7-5 Revised Financial Analysis of New Line of Cellular Telephones ($ millions)

43. TABLE 7-5 (Continued)

46. FIGURE 7A-1 Cash Flow Diagrams for Alternative Service Station Designs

47. TABLE 7A-1 Figures of Merit for Service Station Designs

52. TABLE 7A-2 Four Independent Investment Opportunities under Capital Rationing (Capital budget =$200,000)

57. FIGURE 7A-2 Capital Budgeting Decision Tree