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Income of proprietors
Profits of corporations
Interest (net)
Rental income
Adjustments for net foreign income
Taxes (indirect business taxes)
Employee compensation (wages)
+ Depreciation (capital consumption allowance)
Gross Domestic Product
Real GDP: constant prices (value of goods and services adjusted for changes in the
price level)
GDP Deflator is the price index used to adjust nominal GDP for changes in the
overall prices of goods and services
Best cost: low cost leader among rivals and unique features
After-tax cost (Net cash outflow): (1.00 – Tax Rate) x Tax-deductible cash
expense
After-tax benefit (Net cash inflow): (1.00 – Tax Rate) x Taxable cash receipt
Payback Method: Net initial investment / Increase in annual net after-tax cash
flow
Exchange Rate Risk of Payables: Futures contract -- Call option (option to buy)
Weighted Average Cost of Capital (RE) Formula: kwc = (kdx * wdx) + (kps *
wps) + (kcs * wcs)
k = Cost, w = Weight