Cash flows of two mutually exclusive projects are as follows. Project A costs $80,000 initially and will have a $15,000 salvage
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Dell can fund this growth internally by:
- The $469 million increase in current liabilities serves as a source of funds.
- The estimated increase in net profits to $395 million is approximately $123 million.
- The short-term investment is assumed to be the same as in 1996, namely $591 million.
- Business financing is a funding option that allows business owners to obtain business loans to cover expenses such as temporary cash flow interruptions, expansion projects, stock and equipment, and seasonal spikes in activity.
- Retained earnings, debt capital, and equity funding are the three major sources of corporate financing.
So, according to the given chart:
- As a result, an additional operating asset of $794 million is required to sustain growth.
- The $469 million increase in current liabilities serves as a source of funds.
- The estimated increase in net profits to $395 million is approximately $123 million.
- The short-term investment is assumed to be the same as in 1996, namely $591 million.
- As a result, we can confidently predict that growth will be funded internally.
Therefore, Dell can fund this growth internally by:
- The $469 million increase in current liabilities serves as a source of funds.
- The estimated increase in net profits to $395 million is approximately $123 million.
- The short-term investment is assumed to be the same as in 1996, namely $591 million.
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