CAPITAL INVESTMENT DECISIONS

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  • Created by: josief95
  • Created on: 13-12-15 15:00

1. Cash flow (numbers vertically down)

  • Year 0 = total investment; then every year following = Total annual profit
  • Every year = total investment;
  • Year 0 = Year 0 = total investment; then every year following = investment - annual profit
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2. Average annual profit =

  • Investment cost + total disposal value / 2
  • Total anual profit x life time until replacement (yrs) / life time until replacement (yrs)
  • Total cost of unit x replacement number
  • Net profit per unit x replacement number
  • Total annual profit / Average annual investment x 100

3. Total annual profit =

  • Net profit per unit x replacement number
  • Total annual profit / Average annual investment x 100
  • Investment cost + total disposal value / 2
  • Total cost of unit x replacement number

4. Year 0 =

  • (Total investment); (Total investment)
  • (Total anual profit); (Total investment )

5. Total investment cost =

  • Total cost of unit x replacement number
  • Investment cost + total disposal value / 2
  • Total annual profit / Average annual investment x 100
  • Net profit per unit x replacement number
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