Cash flow production schedule

To estimate the cash flow for a particular year of plant operation, the pretax earnings are computed from Eq. (17.4) and the after-tax earnings from Eq. (17.5). However, in the calculation of the production cost, a more elaborate depreciation schedule, discussed in the next section, replaces the straight-line depreciation used in Section 17.2. The cash flow from plant operations is the after-tax earnings plus the depreciation ... 

There are a variety of objective functions that are used for economic optimization. Some are quite elegant and incorporate the concept of the time value of money. Examples are net-present-value and discounted cash flow. These methods are preferred by business majors, accountants, and economists because they are more accurate measures of profitability over an extended time period. However, a lot of assumptions must be made in applying these methods, and the accuracy of these assumptions is usually quite hmited. The prediction of future sales, prices of raw materials and products, and construction schedule is usually a guessing game made by marketing and business managers whose track record for predicting the future is almost as poor as the weather man. 

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