What is project cash flow? Discuss in details its financial importance and value

Expert Solution

Project cash flow is a statment used to evaluate cash flow for a fixed term of a project. It helps in understanding the inflow and outflow of cash that will be created by a project

Project cash flow= Cash Inflow- Cash Outflow.

When a company invests in a new project, it analysis the cost and expected revenues from the project to decide whether the investment is worth or not. Company examines its relevent cash flows like oppotunity cost, changes in working capital, cash inflows/ outflows to take the decision to proceed with the project or not. Forecasting the amount and timing of project expenses and revenues is the critical element of project cash flow planning.

Creating a project cash flow statement is important as it:

Helps in obtaining certainity and understanding future cash flows.
Reduces the risks of uncertanities.
Assists in prediction of cash shortages and surplus.
Helps in taking funding decisions.

jeff jeffy answered 2 years ago

What is capital budgeting? Discuss in details its financial importance and value.

What do you understand on the term “cash flow analysis”? Explain its importance in financial aspects...

What do you understand on the term “cash flow analysis”? Explain its importance in financial aspects of a company.

Defined value proposition and discuss the importance of a value proposition and what elements affect its...

Defined value proposition and discuss the importance of a value proposition and what elements affect its creation and implementation. What is the value proposition of Dell Company?

explain in details, auditing and its importance

consider a project with the following cash flow; Year cash flow shs '000' abandonment value shs...

consider a project with the following cash flow; Year cash flow shs '000' abandonment value shs '000' 0 (16,000) 1 7,000 ___________ 2 6,000 1,100 3 4,000 9,000 4 4,000 5,000 The cost of capital is 15% and re-investment rate is 20%. Required; i) Determine the optimal abandonment period.

discuss three steps in the capital investment financial analysis: cash flow estimation, project risk assessment, and...

discuss three steps in the capital investment financial analysis: cash flow estimation, project risk assessment, and cost of capital estimation. how might each of these influences a healthcare managers decision to move forward with an investment decision

INITIAL POST: Briefly define and discuss financial instruments, derivatives, and hedges (fair value and cash flow)....

INITIAL POST: Briefly define and discuss financial instruments, derivatives, and hedges (fair value and cash flow). You can find some initial information in the textbook, Chapter 13, appendix 13.1 but you should use resources other than the textbook for your post.

Discuss the importance of stakeholders for a project

What is the Net Present Value of the following cash flow stream? Year Cash Flow 0...

What is the Net Present Value of the following cash flow stream? Year Cash Flow 0 -$489 1 $363 2 $192 3 $161 4 $256 Assume an interest rate of 13% Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. If your answer is negative, enter your answer as a negative number rounded off to two decimal points.

How is the net present value (NPV) calculated for a project with a conventional cash flow...

How is the net present value (NPV) calculated for a project with a conventional cash flow pattern, and what are the acceptance criteria for NPV, how are they related to the firm’s market value with explanation of the similarities and differences between NPV, PI, and EVA. PLEASE MINIMUM 350 WORDS.

Question