When estimating a capital budget, it is common to separate cash flows into: 1) the initial investment, 2) incremental cash flows over the life of the project, and 3) a terminal value.

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Business

Madalyn Baxter

24 February, 15:59

When estimating a capital budget, it is common to separate cash flows into: 1) the initial investment, 2) incremental cash flows over the life of the project, and 3) a terminal value.

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Paris · Answer 1

all the option are correct and true.

Explanation:

the main aim of capital budgeting is to assess which long term investments are suitable and profitable for the business in the long run. briefly, this is done by discounting cash flows and getting their present values (of the future cash flows).

the cash flows are separated as initial cash outflow, the cash inflows and outflows over the span and eventually the final value.