Asked by Aliyana Shivji on Jul 17, 2024
Verified
The correct formula of project cash flow is sales - costs - taxes - project capital spending.
Project Capital Spending
Expenditures for acquiring, upgrading, or maintaining physical assets such as property, industrial buildings, or equipment to increase the scope of operations.
Sales
The cumulative revenue generated through the sales of products or services during a designated timeframe.
Costs
The amount of money required to produce or acquire goods or services, including manufacturing, purchasing, and marketing expenses.
- Gain an understanding of the thorough framework of project cash flow, including considerations for net working capital adjustments and capital investments.
Verified Answer
AS
aftab shaikhJul 18, 2024
Final Answer :
False
Explanation :
The correct formula for project cash flow is typically: Cash Flow = Sales Revenue - Operating Costs - Taxes + Depreciation. Project capital spending is not subtracted directly in this formula; instead, depreciation (which spreads the cost of capital spending over its useful life) is added back.
Learning Objectives
- Gain an understanding of the thorough framework of project cash flow, including considerations for net working capital adjustments and capital investments.