Hello guys,
I hope you are all progressing with your studying. I have been struggling with this question for quite some time so i decided to post it here and see what you think.
So I am looking at the example of Kaplan on page 144 where you are expected to calculate the FCFF. Actual balance of PPE for 2009 is $300 and forecasted one for 2010 is $400. Depreciation is $50 and $40 for 2010 and 2009 respectively. Now the question is, why does the book doesn´t take into account Depreciation when calculating NFInv and estimates only $100? Shouldn´t that be 400-300-Depreciation?
Thanks
I hope you are all progressing with your studying. I have been struggling with this question for quite some time so i decided to post it here and see what you think.
So I am looking at the example of Kaplan on page 144 where you are expected to calculate the FCFF. Actual balance of PPE for 2009 is $300 and forecasted one for 2010 is $400. Depreciation is $50 and $40 for 2010 and 2009 respectively. Now the question is, why does the book doesn´t take into account Depreciation when calculating NFInv and estimates only $100? Shouldn´t that be 400-300-Depreciation?
Thanks