Depreciation Problems Excercise 17.1 Part 1 G


Depreciation Problems Excercise 17.1 Part 1 G

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sheridan
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Part G asks 'What is the after-tax cash flow each year? 

The answer is After-tax income plus depreciation.  Can someone explain this? To me, it seems like depreciation would subtract away from your income.

[NEAS: Illustration: Suppose the net cash flow is $2.8 million and depreciation is $1.5 million. GAAP income is $2.8 million – $1.5 million = $1.3 million. We add back depreciation to get the net cash flow.]


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