Escolar Documentos
Profissional Documentos
Cultura Documentos
Cash Flows
Year 1 2 3 4 5
Interest 10 10 10 10 10
Principal 100
The two scenarios have identical revenue and profits - however scenario 2 has less working capital
reinvestment neeeds - hence creates better outcome in terms of NPV of cash flows.
Scenario 1 Scenario 2
Y1 Y2 Y3
Revenue 20 30 40 Revenue
Y1 Y2 Y3
20 30 40
5 7.5 10
2 3 4
2 1 1
3 6.5 9
4
3 6.5 13
A=B*C
# 'incremental' RoIC has been used for illustration # 'incremental' RoIC has been used fo
A=B*C