Review of Domestic Capital Budgeting For our purposes it is necessary to expand the NPv equation CF=(R-0C1-D-l,)(1-x)+D1+l1(1-x) R, is incremental revenue I, is incremental interest expense Ct is incremental operating t is the marginal tax rate cash flow D, is incremental depreciation McGraw-Hilylrwoin 17-5 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rightsMcGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 17-5 Review of Domestic Capital Budgeting For our purposes it is necessary to expand the NPV equation. CF (R OC D I )(1 τ) D I (1 τ) t = t − t − t − t − + t + t − Rt is incremental revenue Ct is incremental operating cash flow Dt is incremental depreciation It is incremental interest expense  is the marginal tax rate