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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 !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.
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