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John Moffat.
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September 18, 2020 at 2:16 pm #586040
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Investment is 46000 in a lorry for 4 years. Scrap=7000.depreciation is straight line. Op profit/losses are;
year1 16500
year 2 23500
year3 13500
year 4 (1500)
I dont how to treat depreciation when calculating payback. Plz help !September 18, 2020 at 2:23 pm #586044
Payback period is a cash based measure.
Depreciation is not a cash flow and therefore needs adding back to the profits to arrive at the cash flows on which the payback period is calculated.
I do suggest you watch my free lectures on investment appraisal.
The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
September 18, 2020 at 2:30 pm #586047
I do watch and enjoy your lectures very much. So thank you for your time and efforts ! May God bless you and your family.
September 19, 2020 at 9:21 am #586114
You are welcome 🙂
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