Why are we more likely to need to calculate the PV of cash flow streams than the FVof streams?

Q: what is the projected cash flow statement?

A: Cash flow statement: The cash flow statement shows only inflows and outflows of cash. It does not…

Q: What is alternative cash flow measures?

A: Cash flow refers to the amount of cash that moves in and out of the business because of its…

Q: What are the two fundamental approaches to Probabilistic Cash Flow Analysis? What are its benefits?

A: The two fundamental approaches to the probabilistic cash flow analysis is shown as follows: Cash…

Q: Describe the Replacement Analysis Using the Cash-Flow approach?

A: The cash flow approach clearly reflects the real cash-flow effects for each replacement option as it…

Q: How is payback calculated with equal net cash inflows?

A: A payback period is the amount of time needed to earn back the cost of an investment. The length of…

Q: Describe about the cash flow risk.

A: Cash flow is the net amount of cash and cash-equivalents being transferred into and out of a…

Q: Is it worth the effort to estimate daily project cash flows?  Would doing so be helpful in the…

A: Cashflows are usually estimating yearly and then discounted at an appropriate discount rate

Q: Describe the procedure of Estimating Risky Cash Flows?

A: Risky cash flow means the future cash flow which falls short of the expectations. This shortage may…

Q: What is nonnormal cash flow projects?

A: Introduction:   Cash flow is the cash or cash equivalent transferred from in and out of business.

Q: Why are discounted cash flow methods of making capital budgeting decisions superior to othermethods?

A:

Q: How can we easily automate the process of computing the net present worthof any project cash flow…

A: Net present value (NPV) is the contrast between the present value of money inflows over some…

Q: chance that a cash flow will turn out to be worse than the estimate. b. the chance that a…

A: Step 1 The planning process used to assess whether an entity's long-term investment is appropriate…

Q: Explain the following terms: incremental cash flow, sunk cost, opportunity cost,externality, and…

A: Incremental cash flow: Incremental cash flow is the extra functioning cash flow that an association…

Q: What is normal cash flow project?

A: Cash flow refers to the amount of cash that the company receives from investing into a project.…

Q: How are cashflows important to capital budgeting?

A: Capital Budgeting process is a way for business to decide the long term economic and financial…

Q: Depending on the cash flow assumption, should the project must use continuous cash flow? why?

A: In continuous discounting and continuous cash flows, the assumption is that the cash stream happens…

Q: Describe the process to find the mean and variance of the PW for the incremental cash flows?

A: Identify the Rate, project life. Then Incremental cash flows should be computed.

Q: When using the NPV method for a particular investment decision, if the present value of all cash…

A: When NPV method is used the investment is measured on three scenarios Positive NPV Where the…

Q: Why is the free cash flow valuation model so widely used?

A: With the free cash flow of the firm, administrators will focus on potential businesses that increase…

Q: Define the term the cumulative cash flow?

A: Cash flows are the cash generated from the operation of the business organisation. In other words,…

Q: What is the purpose of cash flow analysis?

A: Cash flow Statement: It is prepared by the companies. It is a tool in the hands of users of…

Q: How can we estimate Risky Cash Flow?

A: Companies always predict the cash flows related with the project because it helps to company to…

Q: Mathematically, how can we determine the rate of return for a project's cash flow?

A: IRRIt is the capital budgeting technique of discounted cash flow which gives a rate of return being…

Q: How can we predict the future cash flows in a project?

A: Cash flows refer to the amount of net cash and cash equivalents that flow in and out of the…

Q: entify if each of the following would be included or excluded in forecasting cash flows for a…

A: When forecasting future cash flows only those cash flows, which will incur in future [ incremental ]…

Q: What are the two fundamental approaches of the Probabilistic Cash Flow Analysis?

A: Two fundamental approaches of probabilistic cash flow analysis are as follows: 1) Scenario analysis…

Q: Discuss the limitations of the traditional discounted cash flow (DCF) analysis

A: Discounted cash flow determines the present value of the future cash flow of the company. It is…

Q: Mathematically, we can determine the rate of return for a given project’s cash flow series by…

A: When Cash Flows are discounted by using Internal Rate of Return for a period of cash flows held.…

Q: What is incremental cash flow?

A: Cash flow is the movement of cash in the company. While making an investment in any project, cash…

Q: What is free cash flow valuation model?

A: Free cash flow (FCF) is the amount of money available to an organization at their complete disposal,…

Q: Explain the Hedging against cash flow risk.

A: Hedging is a strategy by which a financial instrument is used to minimize the risk created by the…

Q: Give an example of the Cash-Flow Approach?

A: A cash flow hedge is defined as the transaction done to offset the risks from the variability of the…

Q: How can we develop the cash flow series over the project life based on the assumption of most likely…

A: Below is the cash flow developed on the base of assumption:

Q: Operating Cash Flow (OCF) is equal to what?

A: Operating cash flow (OCF) is the cash flow derived from the operating activities. It excludes the…

Q: looking at the same cash flow stream.

A: NPV is the net difference between present value of cash inflows and present value of cash outflows.

Q: Describe the Probabilistic Cash Flow Analysis?

A: Answer: Cash flow applies to the overall sum of cash and cash equivalents that come into and out of…

Q: Use an example to explain to show why capital budgeting relies on cash flows rather than net income?

A:

Q: What is the CAPM beta? How is it different from Cash Flow beta? Provide intuitive explanation and…

A: Beta is an important component of the CAPM- capital asset pricing model, which calculates the cost…

Q: Explain the following terms: incremental cash flow, sunk cost,opportunity cost, externality,…

A: Essentially, incremental cash flow refers to cash flow that a corporation acquires once it takes on…

Q: Illustrate the concept of present-worth analysis based on cash flowequivalence along with the…

A: The concept of present-worth analysis based on cash flow equivalence along with the payback period.…

Q: What is the project's cash flow?

A: Statement of cash flow: It refers to a financial statement that shows all the cash payments and…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.