Fernhurst (sep/dec 16)

No, for two reasons. Firstly the working capital is needed at the start of each year. The start of the first year is 'now' i.e. time 0. The start of the second year is in 1 years time i.e. time 1, and so on. So they need 1025 at time 0 and they need 1066 at time 1 (1025 x 1.04). However, at time 1 the outflow is only the difference of 41 because they already have 1025.