Question

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?

Answer 1

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

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