I have a question about the NPV calculation on replacement projects,
Why the Terminal year flow does not include any term of previous project but
the initial outlay and operating cash flow both consider the difference between the cash flow of current and previous projects? Thanks .
I don’t understand the question
Give a specific example?
i don’t quite get the question either. in typical replacement projects, the existing assets are sold, and the proceeds and associated taxes are included in the initial outlay. of course you don’t have any terminal year cash flows from the old project after the sale.