Making Capital Investment Decisions
7 important questions on Making Capital Investment Decisions
What is relavant cashflow?
What are incremental cashflows?
-sunk cost
-opportunity cost
-side effects
What are Sunk cost?
•A cost that has already been incurred and cannot be removed and therefore should not be considered in an investment decision
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What are side effects of incremental cash flow?
••The cash flows of a new project that come at the expense of a firm’s existing projects.
What are Pro Forma Financial Statements
What is balace depreciation?
•A depreciation method allowing for the accelerated write-off of assets under various classifications
What are Equivalent Annual Cost?
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