A company anticipates sales for the latest venture to be Tk. 300,000 in the first year. Sales are then expected to increase at a rate of 8% per annum over the three-year life of the project. Working capital equal to 10% of annual sales is required and needs to be in place at the start of each year. Calculate the working capital related cash flows and find their present value if the cost of capital is 6%.

A company anticipates sales for the latest venture to be Tk. 300,000 in the first year. Sales are then expected to increase at a rate of 8% per annum over the three-year life of the project. Working capital equal to 10% of annual sales is required and needs to be in place at the start of each year. Calculate the working capital related cash flows and find their present value if the cost of capital is 6%.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 26P

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