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
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
14.4%
of sales and its payables are
14.8%
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 | 0 | 1 | 2 | 3 | 4 | ||||
Sales | $23,451 | $26,281 | $23,567 | $8,721 | |||||
COGS | $9,480 | $10,624 | $9,527 | $3,526 |
.
The required investment in net working capital for year 0 is
The required investment in net working capital for year 1 is
The required investment in net working capital for year 2 is
The required investment in net working capital for year 3 is
The required investment in net working capital for year 4 is
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