when calculate FCFF, do we need to add back the disposition of property, plant and equitpment? thanks.
I posted the same Q a while back, nobody gave a good answer. Best I can tell you is that all the text say yes, but i ran into a bullshit CFAI question that did not do it, although of the answers given if you did add it back it wasn’t enough to throw you into one of the other choices, still an annoyance though.
If you only sold existing PPE and didn’t invest in any further PPE, yes you would add it back. FCFF: NI+NCC+[int(1-Tax Rate0)]-FcInv-WcInv. If you disposed PPE (again assuming you’re there’s no net investment in fixed capital) you would add it to FCFF.
I’m not sure I understand what you’re saying…but I just saw a q that they have say 100 capex, but sold 20 ppe, I counted 80 as an outflow, subtract 80 to find FCFF…but they didnt do that.
Thats what i was saying brazil, the text (at least schweser and i believe CFAI) says you net the two, but i did a CFAI mock that used only the expenditure and did not net out the disposition, which i believe is incorrect.
exactly, I meant that for Jorge…good luck all…and after that…focus on the World Cup!
Re: Equity: FCFF new Posted by: markCFAIL (IP Logged) [hide posts from this user] Date: June 3, 2010 04:36PM Thats what i was saying brazil, the text (at least schweser and i believe CFAI) says you net the two, but i did a CFAI mock that used only the expenditure and did not net out the disposition, which i believe is incorrect." Would you happen to know what question that was?
I don’t remember, sorry, my stuff is in the car. I think it is the 2009 mock though, bc i have 2010 in the room here and didn’t see it there.