# working capital and payback period sample

May 12th, 2015
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1.Prepare a statement showing the incremental cash flows for this project over an 8-year period. I = \$1,000,000-Working Capital: WC = \$200,000Yi is: ChWCi = Previous Year WC - Current WC = 0 (i=1 to 7)andChWC0 = -\$200,000

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Cash Flow Statement1.Prepare a statement showing the incremental cash flows for this project over an 8-year period.I = \$1,000,000-Working Capital: WC = \$200,000Yi is: ChWCi = Previous Year WC - Current WC = 0 (i=1 to 7)andChWC0 = -\$200,000The working capital is recovered so for the end of the year 8 it will be zero or: ChWC8 = \$200,000-Depreciation: For the first five years Yi (i = 1 to 5):Di = (Invest in plant and equipment) / 5 = \$1,000,000/5 = \$200,000For the years 6 to 8 the depreciation will be zero.-Revenues:First year the expected revenues will be:R1 = \$900,000For the years Yi

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