The cash flows for a project are £3,000 in Year 1, £5,000 for Year 2, and £4,000 in Year 3. The project pays back for itself in 2.5 years. The initial cost of the project was: a) £10,000 b) £8,000 c) £12,000 d) £11,000

The cash flows for a project are £3,000 in Year 1, £5,000 for Year 2, and £4,000 in Year 3. The project pays back for itself in 2.5 years. The initial cost of the project was: a) £10,000 b) £8,000 c) £12,000 d) £11,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The cash flows for a project are £3,000 in Year 1, £5,000 for Year 2, and £4,000 in Year 3. The project pays back for itself in 2.5 years.

The initial cost of the project was:

a) £10,000
b) £8,000
c) £12,000
d) £11,000

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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