The initial investment outlay refers to the incremental cash flows that occurs only at the start of a project's life,CFO. The initial invest includes such cash flows:
1. purchase price of the new asset: This is the purchase price paid for the acquisition of a new fixed asset. Purchase price of the assets increase the cash outflow.
2.Cost of installation and transportation: Installation and transportation costs are added to purchase price of asset to determine depreciable value of an investment.
3.Change in working capital : Working capital may be increased or decreased at the time of investment increase in net working capital increase the amount of initial investment and decrease in net working capital decrease the amount of initial investment.If it is increase in zero year, it has to be treated
1. purchase price of the new asset: This is the purchase price paid for the acquisition of a new fixed asset. Purchase price of the assets increase the cash outflow.
2.Cost of installation and transportation: Installation and transportation costs are added to purchase price of asset to determine depreciable value of an investment.
3.Change in working capital : Working capital may be increased or decreased at the time of investment increase in net working capital increase the amount of initial investment and decrease in net working capital decrease the amount of initial investment.If it is increase in zero year, it has to be treated
No comments:
Post a Comment