The effects of changes in net working capital

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Reference no: EM131446134

Your subordinate just submitted a proposal. You find that the analysis is correct except that it has ignored net working capital. You expect net working capital to be $450,000 at time 0, $900,000 from year 1 to year 4, $750,000 from year 5 to year 9 and totally recovered at year 10. If your subordinate had calculated an NPV of $580,000, what should be the project’s NPV including the effects of changes in net working capital? Assume a cost of capital of 10% and a tax rate of 34%

Reference no: EM131446134

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