Question

year 0 - 5 please !

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 15.8% of sales and its payables are 14.6% 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: 2 3 Year Sales COGS $23,588 $9,536 $26,680 $10,786 $23,955 $9,684 $8,298 $3,355 The required investment in net working capital for year 0 is $ 1. (Round to the nearest dollar.)

Answer 1

Net working capital is excess of current assets available over current liabilities.
Net working capital	Current assets - Current liabilities
Calculation of required investment in net working capital for each of the years is shown below
Year	0	1	2	3	4	5	Total
Accounts receivable (a)		$3,726.90	$4,215.44	$3,784.89	$1,326.02
		23588*15.8%	26680*15.8%	23955*15.8%	8298*15.8%
Accounts payable (b)		$1,392.26	$1,574.76	$1,413.86	$489.83
		9536*14.6%	10786*14.6%	9684*14.6%	3355*14.6%
Net working capital (a-b)	0	$2,335	$2,641	$2,371	$836	0
Required investment	0	$2,335	$306	-$270	-$1,535	-$836
		(2335-0)	(2641-2335)	(2371-2641)	(836-2371)	(0-836)
In year 5, $836 of working capital investment would be recovered.
0	$0
1	-$2,335
2	$306
3	-$270
4	-$1,535
5	-$836