Scribd
Upload
505 views4 pages

Calculating Cash Flows For Projects

its good fot those who are intersetedin corporate finance, and for MBA (finance) students, for undergraduates.

Uploaded by

Manoj K
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
505 views4 pages

Calculating Cash Flows For Projects

its good fot those who are intersetedin corporate finance, and for MBA (finance) students, for undergraduates.

Uploaded by

Manoj K
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 4

Calculating Cash Flows For

Projects
Manoj Aryan
Basic Format For Determining Initial Cash
Outflows
(a) 00 Cost of new asset(s)
(b) + Capitalized expenditures(for example, installation costs, shipping expenses etc.)*
(c) +(-) Increased (decreased) level of “net” working capital**
(d) - Net proceeds from the sale of “old” asset(s) if the investment is a replacement decision
(e) + (-) Taxes (tax savings) due to the sale of “old” asset(s) if the investment is a replacement decision

(f) = Initial cash outflow

* Asset cost plus capitalized expenditures from the basis on which tax depreciation is computed.
** Any change in working capital should be considered “net” of any spontaneous changes in current liabilities that occur
because the project is implemented….

By: Manoj Aryan


Determining interim incremental net cash
flow (per period)
(a) Net increase (decrease) in operating revenue less (plus) any net increase (decrease) in opening
expenses, excluding depreciation
(b) - (+) Net increase (decrease) in tax depreciation charges
(c) = Net charges in income before taxes
(d) - (+) Net increase (decrease) in taxes
(e) = Net change in income after taxes
(f) + (-) Net increase (decrease) in tax depreciation charges

(g) = Incremental net cash flow for the period

By: Manoj Aryan


Determining terminal year incremental net
cash flow
(a) Net income increase (decrease) in operating revenue less (plus) any net increase (decrease) in
operating expenses, excluding depreciation
(b) - (+) Net increase (decrease) In tax depreciation charges
(c) = Net change in income before taxes
(d) - (+) Net increase (decrease) in taxes
(e) = Net change in income after taxes
(f) + (-) Net increase (decrease) in tax depreciation charges
(g) = Incremental cash flow for the terminal year before project windup considerations
(h) + (-) Final salvage value (disposal/reclamation costs) of “new” asset(s)
(i) +(-) Taxes (tax savings) due to sale or disposal of “new’ asset(s)
(j) +(-) Decrease (increased) level of “net” working capital*

(k) = Terminal year incremental net cash flow

* Any change in working capital should be considered “net” of any spontaneous changes in current liabilities that occur because
the project is terminated.

You might also like