Asked by
Wardah Alsultan
on Oct 10, 2024
Verified
In the payback method, depreciation is added back to net operating income when computing the annual net cash flow.
Payback Method
A capital budgeting technique that calculates the time required to recoup the cost of an investment.
Depreciation
The allocation of the cost of a tangible asset over its useful life.
Net Operating Income
The income earned from a company's everyday business operations, excluding taxes and interest.
- Learn how depreciation and working capital are factored into cash flow calculations.
Verified Answer
AC
Learning Objectives
- Learn how depreciation and working capital are factored into cash flow calculations.
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