Know Its Value When Buying, Selling or Expanding
Objective: To Help You Value Cash in Today's Dollars
Back to the Fundamentals....The Value of a Dollar
You're constantly making investment decisions in your business—whether to take on a new product line, buy another business, increase advertising expenditures, or add new salespeople. In each instance, you're spending cash today in hopes of a future return. Too often, such investment decisions are made on the basis of informal projections or your instinctive assessments of the future. These factors certainly should be considered, but your first step should be to assess whether the investment makes economic sense.
The examples and cash-flow methods explained in this Report will help you make that economic assessment in such situations as the following:
- When expending money today in exchange for a future stream of cash inflow
- When selling a business in exchange for cash received in future years
- When a business activity is undertaken solely to fulfill a specific project or contract, e.g., a large contract from the government or another customer
- When evaluating a new investment. Example: A new marketing area is being developed or a new product is being launched and the start-up costs will be incurred over a future time period.
In each instance, the questions are: What is your desired return on those costs, and what should your net cash inflow be to obtain that annual return?
Through two case studies, this Report discusses all of the above topics and answers all questions for your use today and to save for future reference.