Management believes that before-tax cash flow
amounts are also useful for evaluative purposes since future income taxes, that are affected by a company's unique tax position and strategies, can make after-tax amounts less comparable.
Often value is estimated using a debt-free assumption, where net operating income [NOI] and before-tax cash flow
[BTCF] are the same amount.
PGI = Potential gross income V&RL = Vacancy and rent loss EGI = Effective gross income OE = Operating expenses NOI = Net operating income DS = Debt service + interest BTCF = Before-tax cash flow
TAXES = Federal and state income taxes ATCF = After-tax cash flow
Subtracting $80 interest expense, before-tax cash flow is $20.
Interest expense (10% of an $800 loan) is also subtracted, to result in annual before-tax cash flow of $20.
When a tax saving occurs, it is added to before-tax cash flow to provide after-tax cash flow.
COMPAQ'S BEFORE-TAX CASH FLOWS FROM ITS TRANSACTION IN SHELL STOCK.
The after-tax CCFs are just the before-tax cash flows
to both debt and equity, reduced by taxes including interest tax shields.
PPG estimates the net present value of the future before-tax cash flows generated by this lease will total approximately $50 million over the life of the anticipated well development, which is estimated to be over 30 years.
The forward-looking statements contained herein include statements relating to the timing and extent of drilling activities and the estimated future before-tax cash flows generated by the lease.
A favorable Private Letter Ruling from the Internal Revenue Service, if received by next spring, could increase Westmoreland's before-tax cash flows
Again the proof is that the before-tax cash flows
to the equity position of $5,740,645 equate to an IRR of 18.