14.20. Method of investment appraisal
For the purpose of investment appraisal, it is necessary to assess and evaluate over a certain period (as defined herein as “the planning horizon of the decision maker”) all inputs required and all outputs produced by the project. Although the information can be contained in the net income statements and projected balance sheets, they are sufficient for feasibility evaluation, and therefore the discounted cash flow concept has become the generally accepted method for investment appraisal.
14.20.1. Definition and computation of cash flow
Cash flow is basically either receipts of cash (cash inflow) or payments (cash outflow). For the purpose of financial planning and determination of the net cash returns of an ...