Question

To construct the first cash flow (cf₁) at the very minimum, the new revenue from your strategy(s) must

be discounted back to the present value by calculating EBIT and that figure will be your

cf_n for each year.

cf₀ (initial cost of your strategy),

cf₁ (discounted cash flow first year),

r (opportunity cost of capital, the rate of the next best alternative use of cash/debt/equity resources).

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