Question

Suppose that Linksys is considering the development of a wireless home networking appliance, called HomeNet, that will provide both the hardware and the software necessary to run an entire home from any Internet connection. Linksys's receivables are 14.3% of sales and its payables are 14.9% of COGS. Forecast the required investment in net working capital for HomeNet assuming that sales and cost of goods sold (COGS) will be as follows: Year Sales COGS $23,484 $9,494 $26,709 $10,797 $23,872 $9,650 $8,667 $3,504 The required investment in net working capital for year is (Round to the nearest dollar.) The required investment in net working capital for year 1 is $ . (Round to the nearest dollar.) The required investment in net working capital for year 2 is (Round to the nearest dollar.) The required investment in net working capital for year 3 is $ . (Round to the nearest dollar.) The required investment in net working capital for year 4 is $ . (Round to the nearest dollar.)

Answer 1

Year	0	1	2	3	4
sales		23484	26709	23872	8667
cost of goods sold		9494	10797	9650	3504
Investment in Accounts receivables -14.3% of sales	0	3358.212	3819.387	3413.696	1239.381
Accounts payable-14.9% of cost of goods sold	0	1414.606	1608.753	1437.85	522.096
net investment in working capital = investment in accounts receivables-accounts payable	0	1943.606	2210.634	1975.846	717.285