Was going through last years mock exam, and there was a corp finance question, nothing too difficult, but part of it required you to calculate an interest expense given that the project was funded 50% with debt. in the answer however the net working capital requirement is left out of the calculation, ie 30k fixed capital outlay 20k nwc 8.5% ytm on debt i assumed int expense in any year would be 50k*.5*.085 but in the answer it does 30k*0.5*0.85 why do they leave out the 20k nwc?
Why would you be charged interest on net working capital?
30k*0.5*0.85 : should be 30k*0.5*0.085
working capital requirement is part of your initial outlay why would you assume that you already have the cash and not that you have to borrow it