CFA 2012 Mock #50 - adding depreciation to Fixed Capital Investments

This is the first time I’ve seen this and I guess it makes sense. To arrive at Fixed Capital investment (FCInv) the problem took ‘long term assets, net’ from 2009 and and subtracted them from the 2010 figure. Finally, they added the 2010 depreciation.

The corresponding CFA material (vol3 pp268-271 and vol4 pp280-283) do not cover this adjustment. Would anyone have some pointers here. I have no idea how many of these FCFF calculations I’ve gone over, however, I’m fairly certain this is the first one that adds depreciation.


do you have the question ? or a source of the problem . because as far as the adjustment for FCInv goes

Begining(2009) - Depreciation(2009) + 2010 LT assets = Ending LT assets

CFA material doesn’t cover it, but they probably assume it is a calculation you should know. Fixed Cost investment, with no purchases of Fixed Cap during the year, can be thought of in two ways: Gross Ending - Gross Beginning or Net Ending - Net Beginning + Depreciation.