ABSTRACT
Cost-based price: Method of pricing based on taking a percentage of costs and ‘marking up’. Cost drivers: Expenses that account for a substantial proportion of the company’s expenses. Depreciation: Items of capital equipment have a productive life of a number of years. Depreciation is the accountancy process where only part of the value is assigned to a given production
period. Depreciation affects profits but is a non-cash expense and so it does not affect cash flow and thus does not enter discounted cash flow calculations.
