Question

The Buck Store is considering a project that will require additional inventory of $185,000 and will increase accounts payable by $153,000. Accounts receivable are currently $525,000 and are expected to increase by 15 percent if this project is accepted. What is the project's initial cash flow for net working capital

Answer 1

Answer:

the initial cash flow for the net working capital is $110,750

Explanation:

The computation of the initial cash flow for the net working capital is given below;

= -Additional inventory + increase account payable - (account receivable × increased percentage)

= -$185,000 + $153,000  - ($525,000 × 0.15)

= -$110,750

Hence, the initial cash flow for the net working capital is $110,750