Skip navigation

2. Characteristics of an investment

Any investment means the immobilization of a specific amount of resources for a long period of time, hoping that the profit obtained is greater that he capital that was immobilized. Because of this, ever investment has a series of characteristics:

  • Initial outlay: It is the quantity of money that the company pays when it gets the elements of its asset. (Represented with Do)

  • Time duration: It is the number of years in which there will be inputs and outputs of money as a consequence of the investment project. (Represented with n)


  • Net flows of cash: There are the difference between the receivables and the payments that happen in the company during each period of time of the investment. When it comes to the payment, we do not keep in mind the financial payments. (Represented with F)


  • Salvage value: Is the value of the good at the end of the investment's life. This value can be 0, and it is added to the receivables of the last cash flow.

Multi-choice

Question

  • Salvage value: Check the true option

Answers

Is the value of the good at the start of the investment's life.

This value can be 0, and it is added to the receivables of the last cash flow.

This value must be higher than the investment

Feedback

Investment characteristics:

Question

Investment has a series of characteristics:

Answers

Initial outlay and Time duration

Net flows of cash

Returning Capital

Investment  Experts

Feedback

Question

Net flows of cash:

Answers

There are the difference between the receivables and the payments that happen in the company during each period of time of the investment.

When it comes to the payment, we do not keep in mind the financial payments.

Net flows of cash is Represented with F

Feedback