Compute the change (investment) in net working capital for year 2024 using the following information for Great
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Question:
Compute the change (investment) in net working capital for year 2024 using the following information for Great Trees Corp.
| Discount rate | 10% | ||||||
| Tax rate | 20% | ||||||
| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | ||
| Sales | |||||||
| Estimated sales after adjusting erosion/synergies | $30000 | $33400 | $36200 | $38400 | $40200 | ||
| Current assets as % of sales | 9% | 8% | 10% | 17% | 11% | ||
| Current liabilities as % of sales | 7% | 4% | 8% | 7% | 4% | ||
| Fixed part of Cost of Goods Sold | $3,000 | $1,000 | $5,000 | $4,000 | $3,000 | ||
| Cost of Goods Sold as % of sales | 30% | 40% | 30% | 20% | 30% | ||
| Fixed part of Selling & Admon. (S&A) expenses | $3,000 | $4,000 | $3,000 | $1,000 | $3,000 | ||
| S&A expenses as % of sales | 20% | 10% | 10% | 30% | 30% | ||
| Depreciation | $1,000 | $2,000 | $2,000 | $2,000 | $2,000 | ||
In your answer do not enter/use dollar sign ($); use commas to separate thousands; and round up to zero decimals.
Specific instructions as to the sign to enter: If the change in NWC is a cash outflow, you must enter a negative sign ( - ) in front of the first digit (no space in between). If the change in NWC is a cash inflow, simply enter the number (do no enter the + sign)
The change (investment) in net working capital (ΔNWC) in year 2024 is ?
Expert Answer:
The formula to calculate the net working capital NWC is NWC Current Assets Current Liabilities 2020 ... View the full answer
Related Book For 
Fundamentals Of Corporate Finance
ISBN: 9780135811603
5th Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
Posted Date:
