3. Royal Mount Games would like to invest in a division to develop software for video games. To evaluate this decision, the firm first attempts to project the working capital needs for this operation. Its chief financial officer has developed thefollowing estimates (in millions of dollars): (To copy the table below and use in Excel, click on icon in the upper right corner of table.)1Cash2 Accounts receivable3 Inventory4 Accounts payableYear 1622517Year 21226922Year 31524million. (Round to the nearest integer.)million. (Round to the nearest integer.)million. (Round to the nearest integer.)million. (Round to the nearest integer.)million. (Round to the nearest integer.)1124Year 416221328Year 514251631Assuming that Royal Mount currently does not have any working capital invested in this division, calculate the cash flows associated with changes in working capital for the first five years of this investment. (Enter increases as negative numberssince they are uses of cash.)The cash flow associated with the change in working capital for year 1 is $The cash flow associated with the change in working capital for year 2 is $The cash flow associated with the change in working capital for year 3 is $The cash flow associated with the change in working capital for year 4 is $The cash flow associated with the change in working capital for year 5 is $

Working Capital is shown the difference between current assets & current liabilties of the firm.…

Royal Mount Games would like to invest in a division to develop software for video games. To evaluate this decision, the firm first attempts to project the working capital needs for this operation. Its chief financial officer has developed the following estimates (in millions of dollars): (To copy the table below and use in Excel, click on icon in the upper right corner of table.) 1 Cash 2 Accounts receivable 3 Inventory 4 Accounts payable Year 1 6 22 5 17 Year 2 12 26 9 22 Year 3 15 24 11 24 million. (Round to the nearest integer.) million. (Round to the nearest integer.) million. (Round to the nearest integer.) million. (Round to the nearest integer.) million. (Round to the nearest integer.) Year 4 16 22 13 28 Year 5 14 25 16 31 Assuming that Royal Mount currently does not have any working capital invested in this division, calculate the cash flows associated with changes in working capital for the first five years of this investment. (Enter increases as negative numbers since they are uses of cash.) The cash flow associated with the change in working capital for year 1 is $ The cash flow associated with the change in working capital for year 2 is $ The cash flow associated with the change in working capital for year 3 is $ The cash flow associated with the change in working capital for year 4 is $ The cash flow associated with the change in working capital for year 5 is $[

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 9MC