Page 188 - DMGT521_PROJECT_MANAGEMENT

Neha Tikoo, Lovely Professional University
Unit 11: Project Cash Flow

Unit 11: Project Cash Flow Notes

CONTENTS
Objectives
Introduction

11.1 Determining Project Cash Flow
11.2 Elements of a Cash Flow Stream
11.3 Cash Flow for a Replacement Project

11.4 Cost of Capital
11.4.1 How it Works
11.4.2 Why it Matters
11.5 WACC
11.6 Optimal Capital Budget

11.6.1 The Investment Opportunity Schedule (IOS)
11.6.2 Combining the MCC and IOS Schedules
11.7 Capital Rationing

11.8 Summary
11.9 Keywords
11.10 Review Questions
11.11 Further Readings

Objectives

After studying this unit, you will be able to:

 Define Project Cash Flow
 Discuss about elements of cash flow stream

 Describe cash flow of a replacement Project
 Explain Cost of Capital
 Discuss Optimal Capital Budget

Introduction

Cash flow is the movement of money into or out of a business, project, or financial product. It is
usually measured during a specified, finite period of time. Measurement of cash flow can be
used for calculating other parameters that give information on a company’s value and
situation.

LOVELY PROFESSIONAL UNIVERSITY 183