Doubts in merger & acquisition - sfm

Can you post complete question?

I did not find this question in PM available on BoS website.

I think in question EBIT is given and it will grow at prescribed rate, hence there is no logic of adding back depreciation, because EBIT is post dep and we don't know rate of depreciation.

and if you look from cash flow prospective you have to add back depreciation in EAT, instead you can reduce Capex by dep, it will have same effect.

2. Capex will grow @ 15%, here we are looking for increamental cash inflow and outflow and not for gross investment.

If you read EBIT will grow at 20%, this EBIT has impact of all changes in revenue, COGS, Opex and dep. gross dep for the year is reduced to arrive at EBIT for the period.

you can add back depreciation if you are working with operating cashflow, here we are looking and net cashflow over the growth period after that growth is stable.

objective in this question is to caclulate PV of all future cashflow, and net cashflow for the period will be pulled back to T=0 and terminal cash flow will also be pulled, when you are pulling terminal cashflow it include all investments, if we apply you logic of 750+172 it will create duplicity and initial 750 and all investments will be realised as terminal cashflow.

hope this help

The cash outflow is 115% is cummulative so you will have to look at differential only

see this table, if this can help you to visualize