Question ID: ICMA 1603.P2.069 (Topic: Capital Budgeting
- This topic has 1 reply, 2 voices, and was last updated 8 months, 3 weeks ago by Lynn Roden.
In the given question why are we adjusting the existing machinery’s depreciation with the new machinery’s depreciation to arrive at the depreciation tax shield? It’s mentioned that the existing machine is sold while purchasing the new one, which would have happened in Year 0, then why the depreciation is adjusted in calculating year 2 relevant cash flow?
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