I wasn’t trying to compete with you Greenman, my Dad didn’t die so that’s obviously a crazy amount to deal with. In two weeks my own one year old also goes in to find out if she needs a full body cast for 3-6 months (fingers crossed). We’re also wracking our brains trying to avoid bankruptcy from the unemployment overhang, baby medical bills, etc. If we can make it to bonus in March, we’ll be in the clear, but right now, I honestly have been through the expenses 100 times and I can’t see us getting through October. I know we’ll be fine, because the cast (if she needs it) will be temporary, and I have safety nets I can fall back on as a last resort. Last week I was interviewing for part time jobs on top of my 10 hour a day gig. I feel for you because my Dad is getting older has been on my mind a lot too lately. Regardless, it’s not a reason to go around here and Pokhim’s thread bitching about how everyone else’s problems are so trivial like an enormous twat.
I didn’t see it as a gripe, but as a legitimate (but rather simple) question.
@ BS - So we’re both in the same boat. Feeling blue and nervous and kinda twitchy. So let’s not compound the problems by being assholes to anonymous people on an anonymous forum. There’s no good reason to be a jerk.
All cash outflows should be attributed to their respective year. Otherwise, they will be discounted back to the present incorrectly.
Another way to explain it is when you’re calculating IRR, obvioulsy the timing of cash flows is important. Lumping all cash outflows over 5 years into one figure would greatly bias your IRR upwards.
Dude, I didn’t start sh*t I just responded to an asanine comment that came out of nowhere.
I’d say the biggest determination would be the capital allocation decision point, assuming your firm has limited capital resources.
If you make the decision today and retain the future capex $ spend in the form of some sort of budgeting process, i’d make today the start of year 0. The lack of return on this allocated capital is real, i’d call out the opportunity cost of this capital allocation as a note below the DCF analysis so your hacksaw CFO can make sense of it.
If you’re going to raise capital 2 years from now, make year 2 the start of your ‘valuation’ period.
I wish I could tell my investors I’m going to do a real estate development that will take three years to complete but their preference doesn’t start until we have the project leased and cash flowing. I think it will take a long time to find an investor to sign up for that.
is this a real debate? Whoever is suggesting the alternative needs to be hacksawed.
This is what happens when rates stay at zero for too long. People forget that money actually cost something ha ha
I agree with Greenman and BS, NPV is from the present (first year of outflow.)
I am having trouble understanding your answer. What sunk costs? You mean years 0 through 4 when there is no inflow? If so you obviously can’t ignore them since you haven’t sunk them yet.
Or have they already spent some money on this project without considering NPV etc and you want to ignore that? That would be OK.