Page 102 - DBP5043

MEASURING A PROJECT’S BENEFITS

AND COSTS (RELEVANT CASH FLOW)

INITIAL OUTLAY

Items included in the calculation of the initial investment to
purchase a new property are:

The cost of new assets

Expenditures for capital assets such as the cost of installation,
transportation and insurance

Changes in working capital - for example if a company wants to
open new stores, new additions to working capital (like stocks) may
be required to start business operations in the branch. Tax cash
expenses should be included in the calculation of Io

 training costs or other expenses should be considered if the costs
are incurred specifically for the project and these costs will be
considered after the relevant tax (net of tax)

Investment tax credits - credits that can be claimed that investment
from the financial policies of to encourage investment on long-term
assets

 Net income (ie income after tax) from sale of old asset

Additional working capital