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84 EE starts with traditional accounting net income but then makes a series of adjustments. The primary adjustment is to add back depreciation and then

84 EE starts with traditional accounting net income but then makes a series of adjustments. The primary adjustment is to add back depreciation and then subtract a required return on invested capital. The consultants argue for adding accounting depreciation back because it is a sunk cost. It does not represent a current cash flow. For example, suppose a client has accounting net income calculated as

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