Investment apprecial

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February 21, 2019 at 5:43 pm #506060
aliansari14
Member
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Hi sir john,
My question is from the bpp revision kit question 90 and 91,

90) at the back it says that we don’t need to adjust for depreciation bcz operational flows are already after depreciation\
91)but while calculating payback period they have subtracted dep’n of each year from each year ??
I don’t understand it?
February 22, 2019 at 7:51 am #506144
John Moffat
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The have not subtracted the depreciation – they have added it!!

Payback period used the cash flows, and since depreciation is not a cash flow it is added back to the profit to get the cash flow.
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