Additional paid-in capital

Stockholders equity is the interest that all stockholders have in a company and is a liability with respect to the company. This category includes preferred and common. stock as well as additional paid-in capital (the amount that stockholders paid above the par value of the stock) and retained earnings. These are earnings from accumulated profit that a company earns and are used for reinvestment in the company. The sum of these items is the. stockholders equity. 

Additional paid in capital is an account that shows how much more cash has been collected (invested by owners) by the company in excess of par value for its common and preferred stock. Par value is an arbitrary dollar amount assigned to each share of common or preferred stock used to calculate common stock or preferred stock dollar of its own stock. Finally, when treasury stock is listed on the balance sheet, it represents the dollar amount of stock the corporation has bought back to take out of circulation. Corporations buy back stock for various reasons including,... 

The difference between assets and liabilities is the shareholder s equity. This consists of the capital paid in by the owners of common and preferred stocks, together with earnings retained and reinvested in the business. The capital paid in by the shareholders is often listed as the par value of the stock (typically 250 to 1 per share) plus the additional capital paid in when the stock was initially sold by the company. Note that this reflects only the capital raised by the company and has no relation to subsequent increases or decreases in the value of the stock that may have resulted from trading. 

Switching products from POM to OTC status may also result in secondary savings, depending on the health care system. When doctors are paid per consultation (as in France), the reduction of physician visits implies additional savings. When doctors are paid a capitation fee, no direct savings will occur, but their workload might diminish, as has been described for Sweden [1]. 

But for power station applications, the thermal efficiency is not the only measure of the performance of a plant. While a new type of plant may involve some reduction in running costs due to improved thermal efficiency, it may also involve additional capital costs. The cost of electricity produced is the crucial criterion within the overall economics, and this depends not only on the thermal efficiency and capital costs, but also on the price of fuel, operational and maintenance costs, and the taxes imposed. Yet another factor, which has recently become important, is the production by gas turbine plants of greenhouse gases (mainly carbon dioxide) which contribute to global warming. Many countries are now considering the imposition of a special tax on the amount of CO2 produced by a power plant, and this may adversely affect the economics. So consideration of a new plant in future will involve not only the factors listed above but also the amount of CO2 produced per unit of electricity together with the extra taxes that may have to be paid. 

In addition to the fixed capital investment, we should also make an allowance for a process royalty. The problem statement did not specify whether the plant was to be built using proprietary technology, but it is reasonable to assume that a royalty will need to be paid. If a 15 MM royalty is added, then this annualizes to a cost of 3 MM/y, or roughly 0.5% of revenues, which is a reasonable initial estimate. This should be revisited during more detailed design when discussions with technology vendors take place. 

Some processing units and machinery can become idle or redundant (the capital investment made for them remains unutilised in addition, they have to be preserved for use in future and insurance premiums are to be paid to insurance companies). These equipments may even start getting rusted or jammed if they are kept stopped for long time. 

Estimating FCFs from a project is the culmination of estimating income from operations. This estimate is based on accurate estimates of revenue, costs, and expenses. Since depreciation is a noncash expense, it is added back into FCF. In addition, because cash is actually paid out in taxes, capital spending, and working capital, each reducing FCFs, these items are subtracted from the FCF. 

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