Calculation of CapEx for FCFF/FCFE

CFA Level II
#1

Ok so im a little confused as to how to calculate CapEx and would like a definitive answer. The Schweser book says if no fixed assets were sold, CapEx is equal to the change in net PPE plus depreciation. However, in a blue box example, they did not substract accumulated depreciation from gross PPE (they just took difference between the gross PPE’s). CAN SOMEONE PLEASE SHED SOME CLARIFICATION??

ALSO, if I were to calculate FCFF/FCFE by first calculating CFO, would I then need to add back depreciation in the calculating for FCinv? I got a question wrong in a Schweser mock because apparently i was supposed to add depreciation back to net income AND change in gross PPE.

PLEASE HELP, THIS IS DRIVING ME CRAZY.

#2

Calm down my friend,

it’s change in GROSS Fixed assets, _ or _ Change in Net fixed assets + depreciation.

#3

Question: For FCFF/FCFE I only add Dep as a NCC. When should it also be used for Cap Ex?

#4

As this person said, add it back to the change in NET PPE. The question would have to either say the PPE values are net or they have to give you the values for accumulated depreciation.

and thank you data storm!

#5

yea this is weird for sure…saw it and was like Wow really