A company is planning an investment of 5,000,000
today.
The investment is depreciated on a straight-line basis over the
life of 5 years and the residual value at the end of the project is
assumed to be 500,000.
The investment will generate the following income over the next
five years: 4,000,000, 4,500,000, 5,000,000, 5,500,000 and
6,000,000.
Payable operating expenses (operating expenses excluding
depreciation) will amount to 60% of the income in the individual
year.
The annual working capital requirement is...