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Hi Sir Moffat,
Couldn’t the company keep the $100 left over after investing in projects, as reserve for investing in the working capital for the year? Considering there might be higher inflation rates coming into play (although not a part of this practice question) which would mean the company might need some additional funds to buy materials in the upcoming years within the 3 year life of the project?
Kindly let me know your thoughts.
But if they need money in future years then they can borrow the money in future years – why borrow it now?