Capital Budgeting - Accounting Income income, capital, budgeting, accounting

former

Hi,

I know capital budgeting decisions are based on Cash flows and not accounting income but how do you calculate accounting income for a projcet?

Thanks

maryli

The same way you calculate any accounting income.

Revenue - COGS - SG&A - Interest - Tax = Net Income.

You would include Interest in accounting income but not in assessing cash flows for the purposes of calculating NPV of a project.