Question 3

The success of the organization would be determined by the capacity to generate positive cash flow. It is easier to forecast more accurately the cash flow of those projects or businesses that are already running or in existence as compared to those new and recently undertaken. Inaccurate cash flow forecast may lead to disastrous outcome such as acceptance of an unprofitable projects or rejecting profitable projects.

Explain the major areas to consider when managers are undergoing strategy to estimate cash flow?

Question 4

There are similarities between the business cycle in various industries. A facility or construction company will own and lease some assets to support their operations undergo changes that can be said to have parallel likeness to those of other industries such as those in manufacturing products and services. Multiple stages of product or services development may occur in the same company, so the facilities manager will have to track the various stages for each product and services, and be prepared to allocate space or provide the necessary services accordingly. The placement of any project within conventional stages of development has a definite effect on whether a projects costs are classified as capital or expense.

Explain each of the stages involved in conventional stages of development?

Question 6

Suppose you are asked to decide whether a new project should be launched. Based on the projected sales and costs, we expect that the cash flow over the five-year life of the project will be $2,000 in the first two years, $4,000 in the next two, and $5,000 in the last year. It will cost about $10,000 to begin the project. We use a 10 percent discount rate to evaluate new project. Explain your decision in this case?