Project Cash Flow Essay Example | Topics and Well Written Essays - 1000 words

Project Cash Flow - Essay ExampleTherefore to make water the money later you will certainly want a reasonable compensation for the delayed consumption, the risk or unbelief and the inflation. All these factors delayed consumption, incertainty and inflation determine the interest rate over a certain amount of money which is due at present but the acquisition of which is range off till a future date.In any military position when a person or group becomes or become indifferent to these triplet factors then the value of time to that person or group in that particular situation ceases to matter. The situation can be caused by internal factors as well as external factors or both. We can imagine few such situations, for instance if in a hospital the anaesthesia machine goes bring out in the mid of an operation and the standby machine is at some other OT then irrespective of rational comparisons a new machine has to be ordered because the situation demands it, or for example if there is fire in a factory and machines become un on hand(predicate) for completing the order at knock over worth millions of dollars then new machinery has to be arranged for as soon as possible without going into much details of profitability etc. The example that we have taken are extreme cases. In genuinely life, situations generally lie mid way between conditions of very high emergencies to conditions of no crush at all. There is usually existence of some pressures which limits the time that can be infinitely spent on arriving at the best analysis. In real life decision making is often done amidst many known and many unknown variables.1Situations of absolute unpredictability Situations of absolute predictabilityReliance on the lendable and Reliance on complex decision making toolseasy to operate decision making toolsII) Time value of Money-estimating the discount rate The predictability of a situation depends on a host of internal and external factors. Internal factors can inclu de the knowledge and experience of the organization the management information and coordination systems, the resources and time available to the organization etc. The external factors can include the market forces and the business environment. In the case of applying time value analysis in project decisions the uncertain factor is the toll of capital 2.The estimation of cost of capital or the discounting rate is a complex process and its accuracy depends on many factors. Estimating the cost of capit