 discussed above. Cost-based pricing generally applies to value propositions which are Basic or Expected. On the other hand, a Desired or an Unanticipated value proposition can lead to setting the price levels at end-users' willingness to pay using a value-based model. Cash Flow Analysis For a business to be sustainable it needs to generate positive cash flow, that is, revenues which are larger than costs. Moreover, this positive cash flow needs to be sufficient to pay off any initial investment for setting the business up in a suitable timeframe. Cash flow analysis is one of the most important processes of a business and is handled at the highest levels of management. Cash flow analysis is conducted by looking at the revenues and costs associated with a product over a certain period of time, for example a month or a year. This cash flow, combined with forecasts for a number of years in the future determine the expected overall cash flow. These numbers are then analysed with reference to the initial investment needed to set up pro- duction. If the overall cash flow over the forward estimates is positive, then a product may get the green light. Cash flow analysis translates future cash flows by applicable interest rate(s) to show how much value they have in terms of today's money. For example, because of interest $100 in a year's time is worth less than $100 today. In other words, a cash flow analysis adjusts all future cash flows based on the project's interest rate. It yields an important parameter, net present value (NPV) as the sum of all present and future cash flows considering interest rate. It is cal- culated from the following formula: (2.1) where V. is total cash flow (net value) in year y, and i is the interest rate. Example 2.1 Expenses and income for a internet service provider over a 10-year period are as follows: Initial (year 0) capital cost: $20M Maintenance: $0.3M per year, with full system overhaul of $1M in year 5 Expected number of subscribers in year 1: 20,000 Growth rate of subscriber: 30% p