PROJECT ACCOUNTING III ◆ Cash flow What is left after expenses and taxes have been paid. CF= PBT-Taxes ( Trate) PBT Trate Deprec ◆ Example Revenue= S1.0MMlyr; Expenses=S0.5 MMyr Investment=$0.5 MM; Nd=5; Deprec= SO.1 MM PBT= SI.0 MM-SO5 MM= S0.5 MM: Trate= SO.48 CF=(1-0.48)0.5+10.48)0.1=S0.308MM 10/1899 Engineering economics ll10/18/99 Engineering Economics II 6 PROJECT ACCOUNTING III t Cash Flow What is left after expenses and taxes have been paid. CF = PBT -Taxes = (1 - Trate) PBT + Trate Deprec t Example Revenue = $1..0 MM /yr; Expenses = $0.5 MM/yr Investment = $0.5 MM ; Nd = 5; Deprec = $0.1 MM PBT = $1.0 MM - $0.5 MM = $0.5 MM; Trate = $0.48 CF = (1 - 0.48) 0.5 + (0.48) 0.1 = $0.308 MM