Conventional Cash Flows In Conventional cash flows, cash outflow occurs only once at the start of the project. Example of Conventional Cash Flows: For example, when we take loan from banks, we withdraw whole amount from the account once and pay back to bank in installments till we pay off full principle amount plus any… Read More »
Discounted Cash Flows – Capital Budgeting Techniques We have discussed earlier that accounting rate of return & payback period ignores time value of money and cash flow trends. Means cash inflow of $5000 in the first year and $50 in the fifth year is just as good as $50 in the first year and $5000… Read More »
Annuity Due and Ordinary Annuity – Capital Budgeting Techniques We often encounter situations where we have multiple cash flows of same amount. A very common example of such cash flows is loan repayment plan where borrower is asked to repay the loan by making equal installments over some period of time. Almost all home mortgages, car… Read More »
Cash Flow and Capital Budgeting Cash Flow Definition Fund Flow or Cash flow is the net amount of cash and cash-equivalents being transferred into and out of a business during a specific period of time. Why is cash flow important? The success of any business can be determined through its capacity to generate positive cash flows.… Read More »