Project Financial Analysis: Incremental Cash Flows, Sunk Costs, and Capital Requirements

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Finance - Personal Finance

michael1tekrzp Created by 10 mon ago

Cards in this deck(11)

When calculating project free cash flows, it is important to follow guidelines for _____ cash flows.

In financial analysis, it is recommended to use _____ instead of accounting profits.

Only _____ after-tax cash flows matter when evaluating a project's financial impact.

The effect on cash flows of other projects, such as cash flows diverted from existing products, is known as _____ effects.

Sunk costs are _____ cash flows and should not be considered in project evaluation.

Opportunity costs refer to the cost of _____ the next best alternative.

Overhead costs, such as rent and insurance, are _____ incremental cash flows.

Working capital requirements include extra inventories and _____.

When evaluating a project, _____ payments and other financing costs should be ignored.

To calculate a project's free cash flow, one must estimate operating cash flows, working capital requirements, and _____ requirements.

Working capital may increase or decrease annually as a percentage of sales and is assumed to be _____ at the termination of the project.

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