For project A, the cash flow effect from the change in net working capital is expected...

For project A, the cash flow effect from the change in net working capital is expected to be -500 dollars at time 2 and the level of net working capital is expected to be 1,500 dollars at time 2. What is the level of current liabilities for project A expected to be at time 1 if the level of current assets for project A is expected to be 7,100 dollars at time 1?

For project A, the cash flow effect from the change in net working capital is expected to be -900 dollars at time 2 and the level of net working capital is expected to be 1,600 dollars at time 2. What is the level of current assets for project A expected to be at time 1 if the level of current liabilities for project A is expected to be 3,300 dollars at time 1?

Solutions

Expert Solution

Solution :- (1)

The level of net working capital at time 2 is expected to be = 1,500 dollars

The cash flow effect from the change in net working capital at time 2 is expected to be = -500 dollars

Therefore , The level of net working capital at time 1 is expected to be = 2,000 Dollars

The level of current assets for project A at time 1 is expected to be = 7,100 dollars

Working Capital = Current Assets - Current Liabilities

2,000 = 7,100 - Current Liabilities

Current Liabilities = 5,100

Solution :- (2)

The level of net working capital at time 2 is expected to be = 1,600 dollars

The cash flow effect from the change in net working capital at time 2 is expected to be = -900 dollars

Therefore , The level of net working capital at time 1 is expected to be = 2,500 Dollars

The level of current assets for project A at time 1 is expected to be = 7,100 dollars

Working Capital = Current Assets - Current Liabilities

2,500 = Current Assets - 3,300

Current Assets = 5,800

If there is any doubt please ask in comments

jeff jeffy answered 1 year ago

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