There are several strategies that can be used to estimate the costs of a project that is likely to take several months. First, determine the initial cash outlay which includes items such as equipment costs, shipping costs, installation costs, start-up costs, and training for the people involved. Second, forecast the cash flows from the investment by estimating the net cash the investment will bring, allowing for variables like increased working capital, changes in taxes and adjustments for non-cash expenses. Lastly, determine the minimum return or the hurdle rate. This is the minimum rate of return that a company expects from an investment.
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