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Good evening Mr Moffat, I need your help on the effect of depreciation on payback period investment appraisal.
During my revision with BPP revision kit I came across a question that calculated the depreciation as a cash flow for computing the cummulative cash flow for the payback period, I am not comfortable with this approach because I don’t think depreciation is a cash flow and should not be a determinant factor in calculating how fast a project’s initial investment is gotten back.
I await your feedback
You must ask in the Ask the Tutor forum if you wish for me to answer – this forum is for students to help each other.