1 Determine the net cash flow for the first project year 2 W

1. Determine the net cash flow for the first project year.   
2. What is the net income?
3. What is the Net cash flow?

Solution

1.

CF_t = (revenues - costs)*(1 - tax rate)

2.

A company\'s total earnings (or profit). Net income is calculated by taking revenues and adjusting for the cost of doing business, depreciation, interest, taxes and other expenses. This number is found on a company\'s income statement and is an important measure of how profitable the company is over a period of time. The measure is also used to calculate earnings per share.

Often referred to as \"the bottom line\" since net income is listed at the bottom of the income statement. In the U.K., net income is known as \"profit attributable to shareholders\".

3.

Net cash flow refers to the difference between a company\'s cash inflows and outflows in a given period. In the strictest sense, net cash flow refers to the change in a company\'s cash balance as detailed on its cash flow statement.