Question

Explain the following as factor affecting Long-Term Investment decisions:

Cash flows of the project

Answer 1

In order to evaluate an investment project's long-term profitability and viability, investors and businesses look at the anticipated cash inflows and outflows. Positive cash flows show that the project is making enough money to pay its bills and give investors their money back. On the other hand, negative cash flows could be an indication of a possible lack of profitability as well as financial issues. Investors can make well-informed judgments about allocating resources to long-term investment possibilities by analyzing the timing and size of cash flows.