# Relevant Cash Flows for DCF Working Capital (example 2)

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1. says

The video works for one minute and then it says cannot load movie. Tried opening in different browsers still no luck. Please help.

• says

The video is working fine and so the problem must be at your end.
Go to the support page – the link is above – and you should be able to find help there.

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Thankyou for the reply, I think maybe it’s a apple device problem. At a certain point it stops but if you skip it and go to a later part starts working. Happened with a couple of other lectures too. Will try laptop next time. Thanks again.
The lectures are very helpful, and it all starts to make sense. Thankyou!!!

2. says

Goodday sir. Please how did you get the 20,000. used for working capital. Am a little confused because usually we are supposed to be given a figure for working capital and its usually spread within all years by minusing it from the initial amount and then recouped at the end of the life of the project. pls help!!!! Thank you

• says

The second sentence of the questions says ‘In addition a further \$20,000 working capital will be required at the start of the project’ (I assume that you have downloaded the course notes that go with these lectures?).

We do not usually ‘spread within all years’ – the question will make it clear if there are any more outflows necessary.

We do assume that the working capital is released at the end of the project, and I have done that in this example.

• says

Hi John,

I noticed that in the answer provided on the ACCA website to Question 1 for the June 2013 F9 Paper, the working capital was not stated in year 1 and taken out in the last year but what was stated in each year was the increment (amount) caused by the yearly inflation rate of 4.7%. Why was this done that way? No where in the answer was the 500,00 working capital included.

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The initial working capital of 500,000 is treated as an outflow at time 0 in the answer, which is what we normally do.
The question says that it is to increase by 4.7% each year and so the extra amount has been charged in each subsequent year – this is quite common in the exam.

The one thing that the examiner has not done in his answer is bring in the recovery of the working capital at the end of the machines life. If you had brought it in (as I would have done) then you would still have got full marks.
(The reason that he did not bring it in is because the question says that the machine is to be replaced, and he has therefore assumed that the working capital will still be needed.)

3. says

hi, the lectures are good and helpful. is there a way to download the lectures and use them as I travel.

4. says

right now for NPV ,we only look at working capitals effect on cash flows without considering profit or loss

5. says

because working capital invested at the start of project that’s why it can’t be spread across the whole project

6. says

Why we need to assume the working capital can be pay back in the end of project?if the project make a loss.