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Couple of questions

sReq | uTeK · 2014-12-23 11:39:49

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…

23-12-2014 11:39am

#1

sReq | uTeK

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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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