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Depreciation of Capital Expenditures STEP 21

As the company makes capital investments, these assets will also depreciate. Now, let's add the depreciation associated with future capital expenditures. Our P&L only goes out to 2012, so to we forecast capex in further years by assuming by flat-lining capex as a percent of sales. We have also built into our model the flexibility to choose between our calculated depreciation expense and the depreciation expense forecasted by Wall Street analysts. Computing depreciation expense manually is more labor intensive, and requires more detailed information about the company. In the absence of such information, or to build the LBO model more quickly, you will want to use the analyst projections for depreciation expense rather than build this detailed depreciation schedule.

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