Exam 3: Project Appraisal: Cash Flow and Applications

A company is considering expanding operations to meet growing demand. With the capital expansion the working capital requirements are expected to change. Management expects cash to increase by £10,000, accounts receivable by £20,000, and inventories by £30,000. At the same time accounts payable will increase by £40,000, accruals by £30,000, and long- term debt by £80,000. The change in net working capital is

Initial cash flows and subsequent operating cash flows for a project are sometimes referred to as

If a new asset is being considered as a replacement for an old asset, the relevant cash flows would be found by adding together the expected cash flows still remaining on the old asset to the expected cash flows for new asset.

Cash disbursements may include all of the following EXCEPT

Relevant cash flows are the incremental cash outflows and inflows associated with a proposed capital expenditure.

Relevant cash flows for a project are best described as

Firms are permitted to systematically charge a portion of the market value of fixed assets, as depreciation, against annual revenues.

What term is used for the difference between the cash flow if a project is implemented, and the cash flow if it is not?

Allocation of the historic costs of fixed assets against the annual revenue they generate is called

Which of the following factors are of major importance when considering raw data?