Question
Assuming that Carl's market share will increase by 0.25% per year, you determine that the plant will require an expansion in 2023. The expansion will
Assuming that Carl's market share will increase by 0.25% per year, you determine that the plant will require an expansion in 2023. The expansion will cost $20 million. Assume the following: the debt financing of the expansion will be delayed accordingly (end of 2023), Carl's uses a ten-year bond, interest rates remain the same at 6.8%, and Carl's tax rate is 35%. Using this information and the data given below, calculate Carl's additional annual working capital requirements through 2026.
| Projected values (million) | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 |
| Accounts Receivable | $14.229 | $15.645 | $17.165 | $18.821 | $20.625 | $22.594 |
| Inventory | 14.978 | 16.469 | 18.068 | 19.811 | 21.711 | 23.783 |
| Cash | 11.982 | 13.175 | 14.455 | 15.849 | 17.369 | 19.027 |
| Accounts Payable | 11.982 | 13.175 | 14.455 | 15.849 | 17.369 | 19.027 |
.
Answer: Round to three decimal places.
| (million) | 2022 | 2023 | 2024 | 2025 | 2026 |
| Additionalworking capital | $ ? | $ ? | $ ? | $ ? | $ ? |
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Cases in Financial Reporting
Authors: Michael J. Sandretto
1st edition
538476796, 978-0538476799
