where do current sales of $5000 and net profit margin of 10% feature is discounted cash flows in making decisions in Capital Budgeting?

Question

anonymous · Answer

They does not fit directly in making decisions in Capital budgeting. Capital Budgeting is  process to analyse the future capital benefits vis-a-vis cost for getting those benefits.
Using current sales and Margin data, and anticipated growth/de growth ,you estimate the future benefits . Hope this helps. Please post comments

anonymous · Answer

Dear Abishekdokania, Thanks.Very helpful. Confirms other information. Net annual cash flows have been forecast to increase at 2% so I have used this reason for a similar scenario: NGN 200 Million current compay sales, 80 Million from key accounts: Tangible relocation costs 800,000.
One-off disruption will lead to loss of productivity which is equated to 1% of sales for 3months of relocation process. annual additional costs are 50,000. Annual cost saving after tax is 150,000. Inflation @ 3%. nominal after tax cost of capital is 15%. Project life is 6 yrs. Please look at attached computation. Is it right?