Question

Match each type of cash flow to its timing of a typical project: initial, on-going, and terminal.

Decrease in net working capital …………………….

Purchase equipment    …………………….

Taxes    …………………….

Sunk Costs …………………….

Answer 1

Decrease in net working capital - on going ( Working capital comprises of stock, debtors, creditors, cash etc. Since these are almost daily  requirements of a business, they are on going)

Purchase equipment-   Initial (Machinery is purchased at the beginning of any projeact and is not a recurring spend)

Taxes - Ongoing (taxes are paid every year, so this is an ongoing cash flow)

Sunk Costs - ongoing (Sunk costs are the costs that have been incurred by a business and which can not be recovered any longer. These can happen any time during the business)