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what are relevant cash flows
The cash flows that should be included in a capital budgeting analysis are those that will only occur (or not occur) if the project is accepted
incremental cash flows
Erosion or cannibalism
when the demand for one product eats into the demand for another project
Pro Forma
Financial statements projecting future yearsâ operations
cash flow from assets = OCF - net capital spending - changes in net working capital
Depreciation
a non-cash deductible and has cash flow consequences only because it influences the tax bill
straight line depreciation: D = (initial cost - salvage) / number of years
MACRS: multiply percentage given in table by the initial cost
Note 
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