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11 Cards in this Set
- Front
- Back
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salvage value` |
aka terminal CF
ability to sell plant and equipment or redeploy the assets elsewhere
if sold- must pay tax on difference between sale price and book value of asset
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relevant CFs |
opportunity costs ignore sunk cost remember salvage value remember accountants overhead allocation consider change in net working capital |
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sensitivity analysis |
analysis on the effect on project profitability on possible changes in sales, costs and so on |
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break even analysis |
analysis of the level of sales at which a project would just break even |
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real option |
the flexibility to modify, postpone, expand or abandon a project |
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sustainable competitive advantage |
does the company have enough sustainable advantages to exploit, develop and defend its investment opportunity |
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Base Case |
what will happen if the project is not carried out. used to evaluate projects must be realistic to be successful |
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competitive enviornment |
competitors are always changing and attempting to out perform our product and enviornmet |
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project boundaries |
assuring each segment if company/ team understands the problem at hand and can comply without getting to far away
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Corporate vs unit perspective |
take a corporate perspective when considering incremental costs and \benefits |
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Time horizon |
amount of time given to project, useful for analysis, otherwise it seems irrelevent |
