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For project A, the change in net working capital is expected to be 900 dollars at...

For project A, the change in net working capital is expected to be 900 dollars at time 0, the cash flow effect from the change in net working capital is expected to be -300 dollars at time 1, and the level of net working capital is expected to be 1,600 dollars at time 2. What is the cash flow effect from the change in net working capital expected to be at time 2?

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Answer #1

If Cash flow effect from change in NWC is - 300 means Change NWC is $ 300

NWC at Time 1 = NWC at Time 0 + Change in NWC at Time 1

= $ 900 + $ 300

= $ 1200

Change IN NWC at Time2 = NWC at Time 2 - NWC at Time 1

= $ 1600 - $ 1200

= $ 400

Cash flow effect from change in NWC is -$ 400

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