Question

U V W E Jun 15 F Jun 16 G Jun 17 Jun 19 N Jun 24 0 Jun 25 Jun 26 4 6 7 11 81 A B 1 The Widget Company Inc (USD $m) 2 Calculations Cost of sales Total expenses Days payable Accounts payable $m $m days 33,637.50 11,774.80 37.00 4,590.86 H Jun 18 3 37,113.60 14,100.06 37.00 5,191.52 35,332.83 12,895.84 37.00 4,888.93 Jun 20 5 40,165.24 15,241.43 37.00 5,601.22 38,609.28 14,659.60 37.00 ,399.86 KL M Jun 21 Jun 22 Jun 23 8 41,783.90 43,467.7945,219.54 15,846.44 16,475.56 17,129.75 37.00 37.00 37.00 5,841.98 6,076.45 6 ,320.34 83 47,041.89 1 7,810.00 37.00 6,556.07 48,937.67 18,517.37 37.00 6,837.91 Jun 27 12 52,961.53 20,017.82 37.00 7,397.91 50,909.86 19,252.93 37.00 7,112.39 Jun 28 Jun 29 Jun 30 13 14 15 55,095.88 57,316.24 59,626.09 20,813.20 21,640.29 22,500.37 37.00 37.00 37.00 7,673.878,003.818,325.15 84 $m 5 85 0.00 4 3,867.54 (3,867.54) 4,020.11 (152.57) ,166.54 (146.43) 4,335.33 (168.79) 4,498.63 (163.30) 4,693.68 (195.05) 4,883.80 (190.12) 5,081.61 (197.81) 5,272.975,501.555,724.35 (191.36) (228.58) (222.80) 5,956.15 (231.81) 6,180.406 (224.25) ,448.276 (267.87) ,709.36 (261.08) 86 Net Working Capital Net working capital Change in net working capital 89 90 PP&E 91 92 Accounting Depreciation Opening accounting net book value 93 0.00 8,112.00 7,316.25 6,450.04 5,504.78 4,478.07 12,322.87 9,633.336,854.813,984.64 1,020.06 8,339.98 3,447.73 0.00 0.00 94 Sm 0.00 96 One-off capex Regular capex Capital expenditure incurred (nominal) Sm 8,840.00 624.00 9,464.00 0.00 648.96 648.96 0.00 674.92 674.92 0.00 695.17 695.17 0.00 716.02 716.02 10,447.94 737.50 11,185.44 0.00 759.63 759.63 782.42 782.42 0.00 805.89 805.89 0.00 830.06 830.06 12,112.02 8 54.97 12,966.99 0.00 880.62 880.62 0.00 907.03 907.03 0.00 934.24 934.24 0.00 962.27 962.27 97 Sm PP&E - accounting (straight line) years 7.00 Capital expenditure assumed to be made on the first day of the period. Year 99 100 101 102 103 104 105 106 107 108 109 1,352.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1,352.00 1,352.00 92.71 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1,352.00 92.71 96.42 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1,541.13 1,352.00 92.71 96.42 99.31 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1,640.43 1,352.00 92.71 96.42 99.31 102.29 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1,352.00 92.71 96.42 99.31 102.29 1,597.92 0.00 0.00 0.00 0.00 0.00 0.00 0.00 110 111 1,352.00 92.71 96.42 99.31 102.29 1,597.92 108.52 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1,352.00 92.71 96.42 99.31 102.29 1,597.92 108.52 111.77 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3,560.94 1,352.00 92.71 96.42 99.31 102.29 1,597.92 108.52 111.77 115.13 0.00 0.00 0.00 0.00 1,352.00 92.71 96.42 99.31 102.29 1,597.92 108.52 111.77 115.13 118.58 0.00 0.00 0.00 0.00 0.00 3,794.64 1,352.00 92.71 96.42 99.31 102.29 1,597.92 108.52 111.77 115.13 118.58 1,852.43 0.00 0.00 0.00 0.00 5,647.07 1,352.00 92.71 96.42 99.31 102.29 1,597.92 108.52 111.77 115.13 118.58 1,852.43 125.80 0.00 0.00 0.00 5,772.87 1,352.00 92.71 96.42 99.31 102.29 1,597.92 108.52 111.77 115.13 118.58 1.852.43 125.80 129.58 1,352.00 92.71 96.42 99.31 102.29 1,597.92 108.52 111.77 115.13 118.58 1,852.43 125.80 129.58 133.46 0.00 934.24 1,352.00 92.71 96.42 99.31 102.29 1,597.92 108.52 111.77 115.13 118.58 1,852.43 125.80 129.58 133.46 137.47 962.27 112 113 114 0.00 0.00 0.00 0.00 0.00 0.00 0.00 115 117 118 120 0.00 1,444.71 0.00 3,340.64 0.00 3,676.06 0.00 4,354.76 Accounting depreciation 1,742.72 3,449.16 719 Closing accounting net book value 0.00 8.112.00 7.316.25 6.450.04 5,504.78 4 .478.07 12,322.87 9,633.33 6 ,854.81 3 .984.64 1,020.06 8,339.98 3.447.73 0.00 0.00 0.00 121

Answer 1

Option C - 6,211.27

The net book value in the books are understated because the depreciation calculation (as seen in the image) is applied across all the years, rather than only the 7 year period for depreciation.

	Jun-16	Jun-17	Jun-18	Jun-19	Jun-20	Jun-21	Jun-22	Jun-23	Jun-24	Jun-25	Jun-26	Jun-27	Jun-28	Jun-29	Jun-30
	8840					10447.94					12112.02
	624	648.96	674.92	695.17	716.02	737.5	759.63	782.42	805.89	830.06	854.97	880.62	907.03	934.24	962.27
Book Value	9464	10112.96	10787.88	11483.05	12199.07	23384.51	24144.14	24926.56	25732.45	26562.51	39529.5	40410.12	41317.15	42251.39	43213.66
	Jun-16	Jun-17	Jun-18	Jun-19	Jun-20	Jun-21	Jun-22	Jun-23	Jun-24	Jun-25	Jun-26	Jun-27	Jun-28	Jun-29	Jun-30
8840	1262.857143	1262.857143	1262.857143	1262.857143	1262.857143	1262.857143	1262.857143
624	89.14285714	89.14285714	89.14285714	89.14285714	89.14285714	89.14285714	89.14285714
648.96		92.70857143	92.70857143	92.70857143	92.70857143	92.70857143	92.70857143	92.70857143
674.92			96.41714286	96.41714286	96.41714286	96.41714286	96.41714286	96.41714286	96.41714286
695.17				99.31	99.31	99.31	99.31	99.31	99.31	99.31
716.02					102.2885714	102.2885714	102.2885714	102.2885714	102.2885714	102.2885714	102.2885714
10447.94						1492.562857	1492.562857	1492.562857	1492.562857	1492.562857	1492.562857	1492.562857
737.5						105.3571429	105.3571429	105.3571429	105.3571429	105.3571429	105.3571429	105.3571429
759.63							108.5185714	108.5185714	108.5185714	108.5185714	108.5185714	108.5185714	108.5185714
782.42								111.7742857	111.7742857	111.7742857	111.7742857	111.7742857	111.7742857	111.7742857
805.89									115.1271429	115.1271429	115.1271429	115.1271429	115.1271429	115.1271429	115.1271429
830.06										118.58	118.58	118.58	118.58	118.58	118.58
12112.02											1730.288571	1730.288571	1730.288571	1730.288571	1730.288571
854.97											122.1385714	122.1385714	122.1385714	122.1385714	122.1385714
880.62												125.8028571	125.8028571	125.8028571	125.8028571
907.03													129.5757143	129.5757143	129.5757143
934.24														133.4628571	133.4628571
962.27															137.4671429
Total Depreciation	1352	2796.708571	4337.834286	5978.27	7720.994286	11061.63857	14510.80143	16719.73857	18951.09429	21204.61286	25211.24857	29241.39857	31803.20429	34389.95429	37002.39714
Net book value	8112	7316.251429	6450.045714	5504.78	4478.075714	12322.87143	9633.338571	8206.821429	6781.355714	5357.897143	14318.25143	11168.72143	9513.945714	7861.435714	6211.262857