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Dear Sir,
In the past exam question (6/11) for BRT company the working capital of 820 was given back in Year 4, however, in the question of CJ Co (12/10) in Yr4 the working capital figure was (13). Shouldn’t it have been 285 instead (285 is the figure we get when inflating the working capital)? I cannot understand the logic here.Can you please enlighten me?
Thanks very much
Two things!
Firstly we usually assume that when we come to the end of a project we get back all of the working capital that we had invested (not the inflated amount – simply the total of all the outflows).
Secondly however, in this question it specifically told you (in the final paragraph) to ignore any working capital recovery.
Thank you for clarifying this for me Sir.
Read the question so fast that i missed the ignore any working capital recovery part. >_<
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