When estimating FCFF for division B spinoff, depreciation is deducted from FCF to arrive at taxable profits. But depreciation is not added back subsequently even though it is not a cash flow - doesn't this underestimate Vogel's CF by the tax allowable depreciation amount?
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Vogel june2014
11y ago#1It is because the amount needed to maintain the assets (which is a cash flow) is assumed to be the same as the depreciation figure.
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