The formula for TNOCF states
TNCOF = Salvage Value + NWC - [Salvage value - Book Value@end] x (Tc)
Why is it that an increase in Net Working Capital Investment … leads to an INCREASE inthe terminal cash flow? Surely that shuold decrease your cash flow if you increase your NWC investmen by spending shouldn’t it?
I’m having trouble understanding Schweser’s Reading #22 EOC Qn # 3 & 4 whereby ’ the NWC will return to original level when the machine is sold after 6 years '.