On this question there are 2 problems with the explanation.
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When calculating Investment in WC, they do not subtract out cash/equivalents from current assets, or notes payable from current liabilities. The book makes clear that we should make these adjustments for FCF valuation purposes.
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When calculating net borrowing, they subtract instead of add the increase in notes payable, the book example 11 pg.297 shows that we should include notes payable as part of net borrowing. Does anyone know if the CFAI noted this in last years errata?
Thanks