Computations

The Compute Menu

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Figure 9.1: The Compute Menu

The Compute menu, shown in Figure 9.1, offers the following options to apply to generic cashflows:

Computing an After Tax Cashflow is useful when taxes affect investment alternatives differently. Comparing after tax cashflows provide a more accurate determination of the cashflows' profitabilities. You can set default values for income tax rates by selecting Tools Define Rate Income Tax Rate... from the Investment Analysis dialog box. This opens the Income Tax Specification dialog box where you can enter the tax rates.

Currency Conversion is necessary when investments are in different currencies. For data concerning currency conversion rates, consider http://dsbb.imf.org/ , the International Monetary Fund's Dissemination Standards Bulletin Board.

A Constant Dollar (inflation adjusted monetary value) calculation takes a cashflow and inflation information and discounts the cashflow to a level where the buying power of the monetary unit is "constant" over time. Groups quantify inflation (in the form of price indices and inflation rates) for countries and industries by averaging the growth of prices for various products and sectors of the economy. For data concerning price indices, consider the United States Department of Labor at http://www.dol.gov/

and the International Monetary Fund's Dissemination Standards Bulletin Board at http://dsbb.imf.org/ . You can set default values for inflation rates by clicking Tools Define Rate Inflation... from the Investment Analysis dialog box. This opens the Inflation Specification dialog box where you can enter the inflation rates.

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