Word Count : 1034

---

Cash flows for capital budgeting are estimated to evaluate the viability and profitability of long-term investment projects. These cash flows include all the incremental cash inflows and outflows directly associated with the investment decision. Estimating cash flows accurately is essential as the entire decision-making process depends on the reliability of these estimates. The process generally involves identifying relevant cash flows, discounting them appropriately, and analyzing their impact on the firm’s financial health. In capital budgeting, the primary objective is to include only relevant cash flows, which are incremental in nature. Incremental cash flows refer to the additional cash inflows and outflows that will occur if the project is undertaken, as opposed to the scenario where it is not implemented. These cash flows can be classified into three broad categories: initial investment outlay, operating cash flows, and terminal cash flows. The initial investment outlay includes the purchase price of the asset, installation costs, legal fees, transportation, and other expenses required to bring the asset into a usable condition. This is generally considered as a large cash outflow at the beginning of the project. Operating cash flows refer to the additional revenues and expenses generated during the life of the project. Depreciation is considered for tax purposes, though it is not a cash expense, as it affects taxable income. Finally, terminal cash flows involve salvage value, working capital recovery, and any additional inflows or outflows at the end of the project’s life. While estimating cash flows, certain important considerations are kept in mind. These include ignoring sunk costs, as they ____ _________ ________ ____ _________ ________ _____ _________.
_________ ________ __________ ___ __________ __________ ________ ______ _____.
______ _________ ___ __________ ____ ________ _____ _____.
__________ __________ _________ ________ _________ ________ _________ ______ _____ __________ _________ __________.
_______ _________ _________ ______ ________ ______ ____ ______ _______ __________.
___ ________ ________ __________ _______ ____ ________.
__________ ___ _________ ______ _______.
_________ _________ _______ _______ _______ _____ ____ _______ _____ ______ ______.
______ ______ __________ _____ _________ ___ _______ ___ ______ ___.
_______ ___ __________ __________ ____ ________ __________ ___ ______ ____ ________.
_________ __________ __________ ____ ___ ____ ______ ____ ___ ______ ____ ____.
________ ______ ________ ________ _______ _____.
________ _____ _________ ________ _________ _________ _______ _____ _______ _________ ___ ________.
____ ___ _____ _________ ________ ______ _________ _____ _______ _______ __________.
_____ ____ ______ ________ ___ _______ _____ ____ ____.
____ ____ ____ ______ _______ __________ ________ __________ ________ ____ ______.
_____ ____ _______ _________ _______ _______ ______ __________ _______ _________ _______.
___ __________ __________ ________ _____ _______ __________ ______ _________ _________ _______ ___.
________ ___ _______ ________ __________ _________ ___ _______ _________ ___ ______ ______.
_________ ______ __________ ____ _______ ______ ______ _______ ____ ___.
_____ __________ _________ ______ ______ ____ _______.
_________ _________ _______ ___ ______ _____ _____ _______ ______ _____ ____.
_________ _______ ________ ___ ___ __________ ______.
______ _________ _________ _______ ____ _______ _______ ______ _____.
__________ _____ ________ _________ _______ ___ _____ _____ _________.
___ __________ ___ ___ ___ ____ ______ __________ ____ _____.
__________ ___ ____ ________ _______ ______.
________ _____ _________ __________ _____ ______ ________ _________ ________ _______.
____ ___ _________ __________ _____.
_____ _____ _________ _______ _____ ____ ______ ___ _________.
____ _______ ________ ___ ___ _______ ______ _______.
_____ ____ ____ _______ _____ ______.
______ _________ ______ ___ _____ _________ ____ ________ _______ _____ ____.
__________ ________ _______ ______ _______ ____ _______ ______ __________ _________ _________ _____.
___ __________ __________ ______ __________ ______ ___ _____ _____ ________.
___ _______ ___ _________ _____ ___ _______.
_____ ______ ____ _________ _______ _______ _________ _______.
____ ___ ________ _______ ______ __________ _______ ________ ________ ______ ______ ______.
_________ ___ _______ ______ ________ ______ __________ ___ _____ ______ _____.
__________ _______ _________ ___ ______ ____ ___ __________ ____ _______ ___ ______.
______ ______ ___ _______ ____ _________ ______ _______ ______ ________ ____.
_________ _______ __________ ______ _____ _______ __________ ____ ______ _________ ______.
____ _______ ___ ___ ______ _______ __________ __________ _________.
__________ __________ __________ _____ __________ _______ _________ _____ _____ _______.
______ __________ ____ _____ ___ _________ _________ ___ ____.
_______ ____ ___ ______ ________ _________ _________ _____ ______ ______ ___ _______.
_________ ______ ____ _________ ______ ____ ________.
_______ ________ ___ __________ _________ _______ ______ _______.
________ _________ _____ ____ _______ _______ ___ _______.
__________ _______ _____ ________ ______ ________ __________ _________ _____ ________.
_____ _________ ______ ______ ___ ___ _____ ____ _______ ___.
_____ __________ _________ ____ _________ ______ _______ __________ __________ __________.
__________ ______ __________ __________ ____ ________ _________ ________ ___ ______ _____.
_______ _____ __________ ___ __________ __________ ____ _________ _______ __________ ___ _____.
__________ ___ ______ ___ ________ __________ __________ ___.
_________ _______ ____ _____ ________ ________ ___ ________ ____ ______ ________.
_________ ____ _________ _____ ______ ________.
_____ _____ _______ __________ ___ ________ ________.
_______ ____ _____ _________ ________ ______ _____ __________ ______.
________ _______ ____ _____ ________ ____ _______ __________ _______ _____ ______.
_______ _________ ______ _____ _______ ____ ______.
___ ________ _______ ____ __________ ____.
_______ __________ ______ __________ _________ ___.
________ ______ ____ ________ ___ ______.
____ ___ ______ _______ _________ _________ ________ _________ _________.
______ ___ ________ _________ _______ ____ _________ _________ _____.
______ ____ _____ ___ ______ ________ _____ ________ ______ _________.
_________ _____ _____ _____ __________ _______ _______ ______ _____.
__________ _________ ________ _____ ______ _______ ________ ________.
____ ___ _________ __________ ______ _______ ______ ________ ________ __________.
________ __________ __________ _________ ______.
____ __________ ______ ________ _____ ______ _______ ________ _____ _______ ________ ____.
________ _____ ___ _________ ___ ________ _________ ________ __________.
______ ______ _________ __________ _________ _______ ________ ______ ______ ____ ___.
_________ ____ ________ ________ _____ _________.
_______ ______ ___ ________ ____ __________ ______ _______ __________ _________ ____ ___.
____ _________ _________ ________ ___ ____ ___ ___.
__________ __________ ____ __________ ___ ________ ____ _____ ________ _________ _____.
_________ ________ _____ ______ __________ _________ __________ __________ ___ ______ _______.
_________ _________ ___ ______ ________ ____ ______ ___.
____ ____ __________ _________ ___ __________ ___ ________ _______.
__________ ____ ______ _______ ________ ___ ____.
_________ ________ ________ ___ ________ ____ ________ ________ ____.
___ __________ ________ ____ ________.
______ _________ ____ _________ _______ _____.
Get Full Answer on WhatsApp