Using Discounted Cash-Flow Analysis to Make investment Decisions - Indentifying Cash Flows - Discount Incremental Cash Flows
7 important questions on Using Discounted Cash-Flow Analysis to Make investment Decisions - Indentifying Cash Flows - Discount Incremental Cash Flows
What are the 6 examples of incremental cash flows to look out for?
2. Forget sunk costs
3. Include opportunity costs
4. Recognize the investment in working capital
5. Remember terminal cash flows
6. Beware of allocated overhead costs
What does include all indirect effects mean?
What does forget sunk costs mean?
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What does inlcude opportunity costs mean?
What does recognize the investment in working capital mean?
- Short-term assets: accounts receivables, inventories of raw materials and finished goods.
- Short-term liabilities: accounts payable, accruals (liabilities for items such as wages or taxes that have recently been incurred but have not yet been paid).
What does remember terminal cash flows means?
What does beware of allocated overhead costs mean?
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