Hi all, I have a question on the CFA mock exam question #30. The question states the proposed distribution center were financed 40% by debt, then how come the answer seems to be using 50% of debt to finance the 30000 initial outlay ?
use the search function. this has been asked about 10 times already. its an error
hey, by the way, should we be using 30000 or 30000+20000 for this question , I used 50000 (FcInv + NWC) but they used FCInv only… Thanks! M.
well its more likely that you will finance Fixed Cap (like buildings or big machinery) with a mortage or loan. But Working cap…? nah…you dont finance that with loan its working cap… they are current assets, current liabilities. Some of that stuff is super small. thats how i see it
I just posted a question to this on a similar thread. Most working capital is actually financed through short-term loans (i.e. revolver, commercial paper, loan facility). I feel as though this could go either way.