Just started corp fin tonight, and I cannot seem to figure out one tiny thing. And believe me I realize this is probably right in front of me somewhere haha. When calculating the operating cash flows, they are subtracting 1000 from the MACRSD numbers that you are given. WHERE DO THEY GET THE 1000!?? AND WHY ARE THEY SUBTRACTING?? This is probably so simple, but I will sleep better tonight if someone can help me out… Thanks!
AHHH haha…how about I just continue onto the next page and have my question answered there… Anyways, we are good. I think I can rest easy, for tonight at least…
it is a replacement project. 1000 is the deprn. on the old printer. so now you are calculating Delta Deprn. that is why 1000 is subtracted…
Listen to CP, listen well
It’s a Replacement project, so you have to consider the new vs the old. New copier depreciation schedule (as per MACRS): 7920, 10800, 3600, 1680 & 0 Old copier depreciation schedule (as per SL): 1000, 1000, 1000, 1000, 1000 Depreciation Delta each year = DT_t = (newDep_t - oldDep_t)(TR)