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Business Analysis: Microsoft by Conrad Carlberg

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12. Examining Decision Criteria for a Business Case

Chapter 11, “Examining a Business Case: Investment,” looked at the relevant facts surrounding a business case decision. If you worked your way through the case study, you constructed a pro forma income statement and a pro forma cash flow statement. These statements help you to describe the decision quantitatively, but that’s not the end of the process.

When you evaluate an income or cash flow statement it’s important to keep a criterion called the discount factor in mind. The term discounting refers to the estimation of the present value of future cash flows. For example, ...

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