 |  Fundamentals of Corporate Finance, 4/e Stephen A. Ross,
Massachusetts Institute of Technology
Randolph W. Westerfield,
University of Southern California
Bradford D. Jordan,
University of Kentucky
Gordon S. Roberts,
York University
Making Capital Investment Decisions
Key TermsBelow are the key terms featured in this chapter. Clicking on a term will reveal its definition. The textbook's full glossary is also available for online searching.
| Capital Cost Allowance (CCA) | Depreciation method under Canadian tax law allowing for the accelerated write-off of property under various classifications.
(See Refer to page 45, 301)
| | | | | CCA Tax Shield | Tax saving that results from the CCA deduction, calculated as depreciation multiplied by the corporate tax rate.
(See Refer to page 313)
| | | | | Equivalent Annual Cost (EAC) | The present value of a project's costs calculated on an annual basis.
(See Refer to page 324)
| | | | | Erosion | The cash flows of a new project that come at the expense of a firm's existing projects.
(See Refer to page 299)
| | | | | Incremental Cash Flows | The difference between a firm's future cash flows with a project and without the project.
(See Refer to page 297)
| | | | | Opportunity Cost | The most valuable alternative that is given up if a particular investment is undertaken.
(See Refer to page 298)
| | | | | Pro Forma Financial Statements | Financial statements projecting future years' operations.
(See Refer to page 301)
| | | | | Stand-Alone Principle | Evaluation of a project based on the project's incremental cash flows.
(See Refer to page 297)
| | | | | Sunk Cost | A cost that has already been incurred and cannot be removed and therefore should not be considered in an investment decision.
(See Refer to page 298)
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2002 McGraw-Hill Higher Education