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Hi all,
I just an exam at not so long ago, one of the questions was to work out the payback, NPV, ROCE. I can’t remember the exact details of the question but in summary we were told that a company was thinking about changing there transportation policy of buying their own vehicles instead of paying an external transportation provider.
We were then given a list of cash OUTFLOWS, however there was no CASH INFLOWS.
So in general terms how would you go about answering a question like this?
If they were stopping using an external provider then there would be a saving of whatever they were currently paying.
A cash saving is effectively the same as a cash inflow.
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