It should be noted that, although fixed costs are irrelevant in most short-term decision-making situations (because they usually remain unaffected by, for instance, changes in production volumes during a specific period), in these long-term decisions fixed costs are often incurred as a result of, or are affected by a specific investment decision, and are therefore relevant to the evaluation of that decision. Fixed costs tend to relate to the potential production capacity available during a period, rather than the actual level of production utilised during that period. Often investment decisions alter the production capacity and with it the fixed costs of maintaining that capacity. For example, in this case the fixed costs are incurred to provide extra factory space to support production of a new product.

Once the future cash-flows that will be affected by the investment decision have been established a cash flow schedule can be constructed to indicate the amounts and timings of cash flows throughout the life of the project. A cash-flow schedule could be drawn up on a weekly or monthly basis if the magnitude of the relevant cash flows, and the accuracy of the forecast amounts and timings of the cash flows justified the added complexity that this would entail. However, in most cases the cash flow schedule is drawn up on an annual basis with the initial investment cash outlay which occurs at the present time shown separately at 'Year 0'. For our example above a conventional cash-flow schedule would look like this: