Question

Considering a project that will require additional inventory of $216,000 and will increase accounts payable by $181,000. Accounts receivable are currently $525,000 and are expected to increase by 9 percent if this project is accepted. What is the project's initial cash flow for net working capital?

Answer 1

Answer:

$82,250

Explanation:

Inventory would increase by $216,000

Accounts payable would increase by $181,000

Accounts receivable would increase $47,250(9% of $525,000)

Working capital = current assets - current liabilities

                          = (216,000+47,250)-181,000 = 82,250