If accounting and tax deprecation both r given in the question of capital investment so what's the treatment and effects in the NPV ?
Note:
1- accounting deprecation based on straight line & tax deprecation based on reducing balance.
2- balance adjustment in the year of disposal
Regards :
Shoaib
Thanks in advance
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Accounting and tax deprecation in capital budgeting
11y ago#1Accounting depreciation is not a cash flow and is ignored.
Tax depreciation is relevant for calculating the tax charge (and may be reducing balance or maybe straight line - the question will always tell you), and there is a balancing allowance or charge on sale.
You need to watch the free lectures on investment appraisal with tax - I am afraid that I cannot simply type out the whole lecture here.
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