Chapter 3 Flashcards
1
Q
sunk costs =
A
money spend which can not be used again
2
Q
Incidental costs =
A
necessary costs which often are small but unexpected
3
Q
Factors for quality of information
A
- Relevance
- Completeness
- Consistency
- Accuracy
- Reliability
- Timeliness
- Low-cost of collection compare with benefit to be gained by gathering
4
Q
What is working capital?
A
the additional cost nedded when investing in a new project. Example:
- More cash floats
- Larger/smaller stock
- Debitors
- Creditors
Cash flows are adjusted
5
Q
Net operating cash flow
A
Net operating cash flow = Profit before depreciation - Periodic investment (change) in net working capital
6
Q
What is incremental cash flows?
A
Incremental cash flow = Cash flow for firm with the project - cash flow for firm without the project.
Cash flow as a conseqvence of the investment
7
Q
A
