Cash flow diagrams

If the new catalyst requires drastically different conditions, e.g. fluid bed operation instead of fixed bed operation, or if it needs substantial additions to the purification train, it is again possible to calculate the benefit in terms of the return (in reduced operating cost) on the new capital, but it is probably more informative to draw up a cumulative cash flow diagram. This is illustrated in Fig. 3. 

Net future worth NFW , Simple. When plotted as cash-flow diagram, shows timing of investment and income Takes no account of the time value of money... 

Economic analysis can determine the discounted profitability criteria in terms of payback period (PBP), net present value (NPV), and rate of return (ROR) from discounted cash flow diagram, in which each of the annual cash flow is discounted to time zero for the LHS system. PBP is the time required, after the construction, to recover the fixed capital investment. NPV shows the cumulative discounted cash value at the end of useful life. Positive values of NPV and shorter PBP are preferred. ROR is the interest rate at which all the cash flows must be discounted to obtain zero NPV. If ROR is greater than the internal discount rate, then the LHS system is considered feasible (Turton et al., 2003). 

Figure 27 shows the discounted cash flow diagram obtained from Table 8 using the data in Table 7. A net present value of 102,462.21 is obtained at end of 15 years of useful life operation, which shows a profitable investment. Approximate discounted payback period is about eight years. Discounted... 

Figure 27. Discounted cash flow diagram for the productive structure of LHS system with three components...

The cash flow diagram, also referred to as a cash flow model (Fig. 9-9), shows the relationship between revenue, cash operating expenses, depreciation, and profit. This diagram is similar in many respects to a process flow diagram, but it is in dollars. Revenue is generated from the... 

Figure 13.5 Cumulative cash flow diagram. Adapted from D.H.AUen, 1980. A Guide to the Economic Evaluation of projects. Reprinted with kind permission from institution of Chemical Engineers.

Pay-back time is the period required to recover the money initially invested in the project. Thus, the pay-back time is represented by the period (1-6) in the cash-flow diagram (Figure 13.5). The pay-back time is not just the period required for profits to be first generated—sufficient profits then have to be made to cover the initial expenditures made. 

The cash flow diagram shown in Fig. 6-1 represents the steady-state situation for cash flow with sf, cQ, and d all based on the same time increment. Figure 6-2 is for the same type of cash flow for an industrial operation except that it depicts the situation over a given period of time as the cumulative cash position. The time period chosen is the estimated life period of the project, and the time value of money is neglected. 

Figure 5.20. Discounted cash flow diagram based on the economic data in Table 5.7a and cumulative cash flows in Table 5.7b for...

Use the following economic data and prepare a discounted cash flow diagram. Asses the feasibility of the investment on the latent heat storage system ... 

Net cash flow is a relatively simple and easily understood concept, and it forms the basis for the calculation of other, more complex measures of profltahility. Taxes and the effect of depreciation are usually not considered in cash flow diagrams. 

This is not the same payback time indicated by the cash flow diagram, as it assumes that all the investment is made in year 0 and revenues begin immediately. For most... 

Figure 9-1 shows the cumulative cash flow diagram for a project. The PBP is the time that elapses from the start of the project. A, to the... 

Figure 9-4. A continuous cash flow diagram. Source Valle-Riestra [8].

Payback time. The net profit before tax is in average 36 mil. . PBT= 90/(36+6) = 2.14 years. With the net profit the payback time is P57 =l00/(23.4+6)=3.06 years, a value close to that determined from the cash flow diagram. 

To ensure that all positive and negative cash flow items are included in the analysis and to better visualize these cash flows, it is useful to construct a cash flow diagram or taUe. A generalized illustration of a cash flow diagram for n periods of time is shown below. In the diagram, P is the present value of the first cost A is the value of an annuity, a imiform series of equal cash savings... 

Many cash flows that engineers must consider can be assumed to occur continuously, such as accounts receivable, the cost savings resulting from productivity improvements, or the costs of carrying inventories. The following cash flow diagrams serve to illustrate the differences between discrete and continuous cash flows. 

Constant Dollar Analysis Because inflationary effects on the cash flows can be ignored, the constant dollar cash flow diagram consists of four expenditures of 25,000 each. The one caveat in... 

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