The Card Shoppe needs to maintain 18 percent of its sales in net working capital. Currently, the store is considering a four-yea
r project that will increase sales from its current level of $279,000 to $308,000 the first year and to $314,000 a year for the following three years of the project. What amount should be included in the project analysis for net working capital in Year 4 of the project?
As the sales value of year 2, 3 and 4 are same, as capital is adjusted in year 2 and company has equal working capital required in year 3, years 4 is the last year of the project so, working capital will be recovered from the project
Net Working capital will be reimbursed at the end of the project. The accumulated value of investment in working capital will be recorded as cash inflow in the analysis.
The correct answer is letter "C": price unit-elastic.
Elasticity is the feature of goods and services by which their quantity demanded changes as long as their prices change. Elasticity is calculated by dividing the change percentage in quantity demanded by the change percentage in price. When the result is a figure equal to or greater than 1, the demand is elastic. If the figure is lower than 1, the demand is inelastic.
Thus, <em>the university is assuming the football game price ticket per unit is elastic since they believe that decreasing the tickets causes the quantity demanded will increase generating more revenue.</em>
Since in the question it is mentioned that the promise is to be done for paying off the debt i.e. already discharged at the time of bankruptcy also it should be in writing so that it become enforceable in many states