Economics cash flow diagrams

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 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.

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 ... 

The use of cash flow diagrams to visualize the timing of cash flows and to manage cash flows during a project was illustrated. A shorthand notation for the many discount factors involved in economic calculations (factors that account for the time value of money) were introduced to simplify cash flow calculations. Other items necessary for a corrprehensive economic evaluation of a chemical plant were covered and included depreciation, taxation, and the evaluation of profit and cash flow. 

Fig,2 shows the cash flow diagram for the proposal of installing robotic system at workstations S6 and S7. For the economic analysis, the life of robot and motor is taken as 10 years and 5 years respectively. It is also presumed that they will have no salvage value at the end of their life. 

From an overall economic viewpoint, any investment proposal may be considered as an activity which initially absorbs funds and later generates money. The funds may be raised from loan capital or from shareholders capital, and the net (after tax and costs) money generated may be used to repay interest on loans and loan capital, with the balance being due to the shareholders. The shareholders profit can either be paid out as dividends, or reinvested in the company to fund the existing venture or new ventures. The following diagram indicates the overall flow of funds for a proposed project. The detailed cash movements are contained within the box labelled the project . 

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See also in sourсe #XX -- [ ]

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