FCFF using delta working capital

CFA Level II
#1

when we calculate FCFF, it is mentioned we should substract delta working capital, is it only applied to replacement project? if normal expansion project, in 2010, working capital requirement is 200 thousand, in 2009, requirement is 120 thousand. so when we calculate FCFF, should we substract (200-120) or 200 for normal project

#2

they say delta, please use anything else at your own risk… and are u somewhere confusing between Capital Budgeting in Corp Fin… and Equity FCFF chapter? (since you are mentioning expansion and normal projects)?

#3

sorry free cash flow in corp fin, so still delta?

#4

I think it is delta in all places that I have read. In Corp fin. first period extra amount becomes a part of the Initial investment, and gets returned as a Terminal Non Operating Cash Flow at the end of the project. IN most other places - NWCINV - Net Working Capital Investment - is a % of Delta Sales (Increased sales) for the year.

#5

Thanks for sharing