Pre-tax cash flows

The model proposed in this work seeks to optimize the production network of individual value chains and hence neither covers all production activities taking place in a country nor at a single site simultaneously. Due to the lack of taxation-relevant data implied by this value chain perspective, pre-tax cash flows are used in the basic model but an extension to include the effects of taxes is presented in Chapter 3.4.3. Fleischmann et al. (2006) took the same decision in a comparable situation. 

The analysis covers the pre-tax cash flows and return on investment (ROI) from each project. Policy dictates that project return on investment (ROI) exceeds a 15 percent hurdle rate. Acme s cost of capital. The corporate finance department calculates the hurdle rate using a weighted average of the cost of financing Acme s business. 

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