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  3. the projected net income next year for super star

The projected net income next year for Super Star is given in the following table...

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The projected net income next year for Super Star is given in the following table in $ thousand: Net income 15,000 Depreciation 6000 Capital expenditure 6000 Increase in working capital 1500 Super Star expects capital expenditures and depreciation to continue to offset each other and for both net income and increase in working capital to grow at 3% per year. Super Star's cost of capital is 11%. If Super Star were able to reduce its annual increase in working capital by 15% by managing its working capital more efficiently without adversely affecting any other part of the business, what would be the effect on Super Star's value? Comment on the results

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