Relevant Cash Flows Flashcards
1
Q
Sunk Cost
A
money spent that cannot be recovered
irrelevant to NPV, we only want CF today and beyond
2
Q
Opportunity Cost
A
Negative CF associated with forgoing an opportunity
3
Q
Side Effects
A
Incremental CFs +/- from incremental activity
Also called erosion
Basically cannibalizations but can be good for complementary products
4
Q
Non-cash working capital
A
If it increases that is a use of cash
5
Q
Financing cost
A
do not include in CF analysis because it is already captured in the denominator via d /r
