CHAPTER 11 Cash Flow Estimation and Risk Analysis Relevant cash flows Incorporating inflation Types of risk Risk Analysis Proposed Project Total depreciable cost Equipment: $200,000 Shipping: $10,000 | CHAPTER 11 Cash Flow Estimation and Risk QI Analysis Relevant cash flows Incorporating inflation Types of risk Risk Analysis 11-1 Proposed Project Total depreciable cost Equipment 200 000 Shipping 10 000 Installation 30 000 Changes in working capital Inventories will rise by 25 000 Accounts payable will rise by 5 000 Effect on operations New sales 100 000 units year @ 2 unit Variable cost 60 of sales 11-2 Proposed Project Life of the project Economic life 4 years Depreciable life MACRS 3-year class Salvage value 25 000 Tax rate 40 . WACC 10 .
