Assumptions on Cash Flow

Hi Lads,

Im currently doing a corporate finance course and I would have some extra point if I do this exercise right. I have to do a project cash flow and forecast three years the model, it is quite easy or at least that's what i though.

I have a few questions that can modify my model and (which I uploaded here : ) , I have some queries that you might help me with

  • synergies: This project is about a replacement of an old machine. This new one help to produce A , however reduce the cost of production of B. Can I assume that this synergies are included in the COGS ? if so, doing the working capital, should be taken in consideration?. In addition, there are electricity savings, should be included in Opez savings or COGS savings?

  • Another doubt, it is related the disposal of the old machine. It is not mentioned where it is going to be sell, just the sale value and the amortization. Do you think that it should be consider as an opportunity cost and included in the capital investment? or is a sunk cost.

It would be greatly appreciated your help and would make my team to gain a extra points.

Many thanks,

WSO Elite Modeling Package

  • 6 courses to mastery: Excel, Financial Statement, LBO, M&A, Valuation and DCF
  • Elite instructors from top BB investment banks and private equity megafunds
  • Includes Company DB + Video Library Access (1 year)

Comments (1)

Start Discussion

Total Avg Compensation

April 2021 Investment Banking

  • Director/MD (9) $911
  • Vice President (35) $364
  • Associates (188) $234
  • 2nd Year Analyst (107) $150
  • Intern/Summer Associate (96) $145
  • 3rd+ Year Analyst (26) $145
  • 1st Year Analyst (392) $132
  • Intern/Summer Analyst (323) $82