Answer:
D. $21000
Explanation:
Calculation for the amount the firm should use as the initial cash flow attributable
Using this formula
Initial cash flow attributable to net working capital = Change in current assets - Change in current liabilities
Let plug in the formula
Initial cash flow attributable to net working capital=[(Increase in Account Receivable $19,000 + Decrease in inventory $2,000)] - ( Decrease accounts payable $4000)
Initial cash flow attributable to net working capital= (19,000 - 2,000) - [-4,000]
Initial cash flow attributable to net working capital=17,000 + 4000
Initial cash flow attributable to net working capital=$21,000
Therefore the amount the firm should use as the initial cash flow attributable to net working capital when it analyzes this project will be $21,000
