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Dear John,
I’m trying to understand and follow the calculations for working capital in question 1 Dec. 13 exam.
My workings were exactly the same as the ones in the answers and therefore I don’t understand why the (150.86) is in time 1 not time 2?
Could you please talk me through the logic here.Thank you
The working capital is required at the start of each year.
Time 0 is the start of the first year, and the WC required is 130.88.
Time 1 is the end of the first year and the start of the second year. The working capital needed at the start of the second year is 150.86 and is therefore at time 1.
And so on for the later years.
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