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In DCF calculation only the incremental has to be considered. That means that sunk costs (cost that have been spent in the past) or costs which would be spent independently from the project are not taken into account. On the other hand opportunity costs have to be considered. e.g:
- equipment and machines already exist and cannot be allocated to other projects furthermore selling into the market is not possible too => sunk cost wont influence the project decision thats why they wont be considered in the DCF calculation
- equipment and machines exists already but can be used for other existing production as replacement eg. In this case the machine has be considered because otherwise the company has to invest money for the replacement of the existing production (opportunity costs)
BR Dirk
What else can I help you with?
What is the full form of dcf?
Discounted Cash Flow
What has the author Arnold Montague Alfred written?
Arnold Montague Alfred has written: 'Appraisal of investment projects by discounted cash flow' -- subject(s): Accounting, Cash flow, Corporations 'Discounted cash flow and corporate planning'
What are the things a common man know about discounted cash flow analysis?
*Discounted cash flows = cash flow - discountcash flow = cash coming in the organization (inflow)discount = net off the inflows (cost of capital i.e. equity and debt)RegardsVISHAL DUBEYMBA student*(personnel opinion)*Discounted cash flows = cash flow - discountcash flow = cash coming in the organization (inflow)discount = net off the inflows (cost of capital i.e. equity and debt)RegardsVISHAL DUBEYvishaldubey10.comMBA student*(personnel opinion)
What has the author Dirk Hachmeister written?
Dirk Hachmeister has written: 'Der discounted Cash Flow als Mass der Unternehmenswertsteigerung' -- subject(s): Corporations, Discounted cash flow, Valuation, Finance
What is the difference between the net present value and the discounted cash flow method?
cash method is when you get cash, method is when u give it
Are Deferred financing costs on a cash flow operating or financing?
Deferred financing costs are considered a financing activity in the cash flow statement. These costs are incurred when a company raises capital, such as through loans or bond issues, and are capitalized as an asset on the balance sheet. When the costs are amortized over time, they impact the financing cash flows as they reflect the expenses related to obtaining financing.
Blanchford Enterprises is considering a project that has the following cash flow and WACC data What is the project's discounted payback?
To calculate the project's discounted payback period, you need to first determine the present value of each cash flow using the given Weighted Average Cost of Capital (WACC) as the discount rate. Then, you can accumulate these discounted cash flows until they equal the initial investment. The discounted payback period is the time it takes for this accumulation to occur. If you provide the specific cash flow amounts and the WACC, I can help you calculate the exact discounted payback period.
What is the term 'discounted cash flow' in reference to?
A discounted cash flow is an estimate of what today's dollar will be worth tomorrow basically. All future cash flow can only be estimated. There is a mathematical formula that can be used to figure out if an investment has the potential to make money.
Discounted payback method?
A discounted payback method is a formula that is used to calculate how long to recoup investments based on the discounted cash flows of the investment. It is a variation of payback period or the time it takes to recover a project investment given the discounted cash flow it has.
What has the author Andreas Scholze written?
Andreas Scholze has written: 'Discounted Cashflow und Jahresabschlussanalyse' -- subject(s): Discounted cash flow, Valuation, Corporations
What has the author Norman Hutchison written?
Norman Hutchison has written: 'Application of discounted cash flow techniques'
Best available debt to cash flow, worthwhile.?
Debt to cash flow isn't something that costs you anything. It is the amount of debt in comparison to your available cash. It is generally recommended that your cash flow to debt is approximately 70% or higher.
