Question

British metals is reviewing its current accounts to determine how a proposed project might affect the account balances. the firm estimates the project will initially require $81,000 in additional current assets and $57,000 in additional current liabilities. the firm also estimates the project will require an additional $8,000 a year in current assets in each of the first three of the four years of the project. how much net working capital will the firm recoup at the end of the project assuming that all net working capital can be recaptured?

Answer 1

Working capital, otherwise known as net current assets, is current assets subtracting current liabilities.

$81000 + $8000 x 3 - $57000 = $48000//

It says that the net working capital can be recouped, therefore the firm can recoup $48000.