Calculation expected incremental cash flows
How can we approximately calculate expected incremental cash flows for a proposed capital budgeting project?
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We approximately calculate expected incremental cash flows for a proposed project by guessing the changes in sales and expenses which are incremental to the project adding back the incremental depreciation expense because depreciation expense is mainly a non-cash expense.
Otobai Motor Company is currently paying a dividend of $1.40 per year. The dividends are expected to grow at a rate of 18% for the next three years and then a constant rate of 5% thereafter forever. What is the vlaue of its current stock price? Assuming that the discount rate is 10%.{Hint: pages 84-
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