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%.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text: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%.
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