Making capital investment decisions Flashcards

1
Q

How to calculate annual depreciation charge

A

(Initial investment - salvage value) / the depreciable life

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2
Q

How to calculate after tax profit

A

pre tax profit x (1 - tax rate)

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3
Q

How to calculate net cash flow

A

after tax profit + depreciation - increase in NWC (+ decrease in NWC) - investment

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