Initial/TNOCF for Capital Project Analysis?


This may be a silly question, but how can you be certain about whether existing machinery (or whatever it is) will be sold at either the start of a project, or at the end?

Obviously, it should be stated, but I feel like sometimes it is pretty unclear. For example, #51 in Schweser Exam 1 Afternoon Session Volume 2 doesn’t seem to be very clear on this.


Thanks in advance

what are the other alternatives at the end of the project ? Even if you are not selling the machinery you are using that machinery in some other project which is an inflow since you do not have to pay again to purchase the same machinery for the next project. Whatever happens(either sell or reuse) it is an inflow. The only possible way is that the firm forgets about the machinery and just leave it which is not logical (Although it might happen but not in a perfect world and in CFA we are obviously living in a perfect world!). I hope that helps :slight_smile: