saliel
Member
- Apr 11, 2011
- 84
- 18
Amplify plc is considering a project which would require an outlay of 2.4m Tshs, at the outset. The money cash flows receivable from sales will depend on the specific inflation rate for Amplifys product. This is anticipated to be 6% per annum. Cash outflow consists of three elements: labour, material and overheads. Labour costs are expected to increase at 9% per year, materials by 12% and overheads by 8%. The discount rate of 12.34% that Amplify uses is a money discount rate, including an allowance for inflation. One of the key rules of project appraisal is now followed: if the discount rate is stated in money terms, then consistency requires that cash flows be estimated in money terms.>naomba anayeelewa anielekeze namna ya kupata sales,material cost,labour, overheads, cash flow before allowing for price rises?