Question
ABC, Inc. is currently evaluating the purchase of equipment that has an intitial cost of $100,000. Existing overhead will cost $2,000 per year and the
ABC, Inc. is currently evaluating the purchase of equipment that has an intitial cost of $100,000. Existing overhead will cost $2,000 per year and the after tax salvage value (ATSV) will be $7,000 in year 4. The equipment will increase cash balances by $3,000, increase accounts recievable by $6,000, produce additional inventory of $8,000, and increase accounts payable by $4,000. The equipment will provide annual cash flows of $35,000 per year for four years. The required rate of return is 8.00%. What is the initial cost of Net Working Capital (NWC)
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Intermediate Accounting
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield.
9th Canadian Edition, Volume 2
470964731, 978-0470964736, 978-0470161012
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