# Sample Resume : Cash Flow

762 Words4 Pages
Purpose: Introduction Cash flow estimation helps a business determine how money is flowing in and out of a company. This information gives business owners, partners and shareholders a better understanding of the profitability of a company. These estimations can be used as a planning tool to help business make informed decisions regarding potential investment. Capital budgeting makes decisions about the long-term investment of a company 's capital into operations (Mullins, n.d.). These two process can help a company maintain profitability within an organization. This is not a simple process an involves complex calculation in order to determine how this process can benefit a company. This process was used to help Apple determine if a new process would benefit the organization with an initial cash outflow of \$125,000,000. The expected cash flow of the potential investment was given for years one through six. Apple would like to determine if the project should be accepted, should project be accepted with a payback return of 3 year and the projects interest rate of return IRR. If the project’s cost of capital (discount rate) is 12.5%, what is the project’s NPV? Should the project be accepted? Why or why not? The information provided for the cash flow of years one through six is utilized with a discount rate of 12.5% to help determine the NPV. Net present value (NPV) of a project is the potential change in an investor 's wealth caused by that project while time value of money is being accounted for (Net Present Value, n.d.). Based on the information provide and my calculations, I determined that the NPV for the project is \$68,064,427. This number represents a positive projection and should be accepted because of this fact. In th... ... middle of paper ... ...lected from the project over time. This information informs Apple that they will make a profit from investing in this project. As Apple continue to grow it looks for opportunities to improve its overall economic stand point in the world. Conclusion With time Apple is able to make money off the proposed project, but the time required to recoup the initial investment is a critical factor to success. The time constraint of 3 years is not enough time to allow Apple to recoup its initial investment. The discount rate utilizing 3 year of present value should not be accepted because it results in a loss. The MIRR and the IRR should be accepted by my calculation because they reflect a positive return. Utilizing capital budgeting and cash flow can help a company determine if they should invest in a project and determine the potential profits over a determine amount of time.