In the payback method, depreciation is deducted from net operating income when computing the annual net cash flow.

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21-07-2017
Business

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In the payback method, depreciation is deducted from net operating income when computing the annual net cash flow.

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meerkat18 meerkat18 · Answer 1 · 2017-08-03T09:30:25+02:00

meerkat18 meerkat18

03-08-2017

This statement would be false. The depreciation is added back to the net income when computing the annual net cash flow in the payback method. The depreciation is a non-cash item therefore it should not be deducted from the net income when computing the cash flow.

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