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Couple of questions

  • 23-12-2014 12:39PM
    #1
    sReq | uTeK
    Registered Users, Registered Users 2 Posts: 6,062 ✭✭✭


    Hi Guys, I have a couple of questions around investment appraisal that I'm hoping you can help me out with.

    Calculating depreciation - If an asset is worth 500k with a scrap value of 50 after 5 years and we get a 75k grant in year 2 is depreciation calculated as 500-75-50 / 5 or is it 500-50 / 5

    Also, when calculating the payback period i understand you need to start with a negative of -500 for the asset in year 0. do the other costs in year 1 get deducted from the sales revenue specifically depreciation + working capital.

    so for instance

    Year 0 Year 1
    Sales 400
    Cost -500
    Working capital 80
    Depreciation 75

    I understand you bring the -500 across but does the 80 working capital and depreciation also get removed from the 400


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