Change in NWC Example

# Change in NWC Example - \$ 195,400 \$ 340,000 \$ In-Class...

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Change in NWC Example 1 Change NWC = Ending NWC – Beginning NWC Ending NWC = \$9,130 - \$6,860 = \$2,270 Beginning NWC = \$10,454 - \$9,406 = \$1,048 Change in NWC = \$2,270 - \$1,048 = \$1,222

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Project Cash Flows Later in the course, we will analyze these three sources of cash flows to decide if a firm should undertake a project. We’ll look at cash flows like this: 2 Year 0 1 2 3 4 5 Operating Cash Flows - \$ 195,400 \$ 195,400 \$ 195,400 \$ 195,400 \$ 195,400 \$ Net Capital Spending (548,000) \$ - \$ - \$ - \$ - \$ 106,600 \$ Change in Net Working Capital (38,000) \$ - \$ - \$ - \$ - \$ 38,000 \$ Project Cash Flows (586,000) \$ 195,400 \$ 195,400 \$ 195,400

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Unformatted text preview: \$ 195,400 \$ 340,000 \$ In-Class Exercises Calculating Cash Flows From Accounting Information – Like most investments, the project under consideration for a firm is in addition (above and beyond) to its core business. – We are interested in the incremental cash flows (inflows and outflows) that are associated with the new project only. 3 Finance Cash Flow From Accounting Information To-Do’s • Review Chapter 2 and Chapter 2 slides. • Do Prepping for Exams and Problems in book or MyFinance Lab. • Read Chapter 9 and Chapter 9 slides. 4 Appendix 5...
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## This note was uploaded on 01/24/2012 for the course FIN 4260 taught by Professor Victorwakeling during the Spring '12 term at Kennesaw.

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Change in NWC Example - \$ 195,400 \$ 340,000 \$ In-Class...

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