Memo wk 3.docx - ITW Food Equipment Group Memorandum To Management Staff From Finance Team Date 750 LINCOLN AVE TROY OH 45373 T 937-332-2300 Evaluating

Memo wk 3.docx - ITW Food Equipment Group Memorandum To...

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ITW Food Equipment Group Memorandum To: Management Staff From: Finance Team Date: 07/25/18 750 LINCOLN AVE. TROY, OH 45373 T 937-332-2300
Evaluating Project Cash Flows Internal Rate of Return (IRR) IRR will provide us with a quick snapshot of what capital projects will provide the greatest potential cash flow. It can also be used during our budgeting process to provide us with the potential savings we could see from new equipment as compared to continually repairing our older assets. One of the disadvantages to be aware of is that IRR does not account for the project size when making your comparisons. Net Present Value NPV presents us with the idea that dollars received in the future are worth less than dollars in the bank today. Cash flow from future years is discounted back to the present to find their worth. This method produces a dollar amount that indicates how much value the project will create for the

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