Samuels Manufacturing is considering the purchase of a new machine to replace one it believes is obsolete.The firm has total current assets of $930,000 and total current liabilities of $644,000.

As a result of the proposed? replacement, the following changes are anticipated in the levels of the current asset and current liability accounts noted.

Account	Change
Accruals	+$43,000
Marketable securities	0
Inventories	-11,000
Accounts payable	+86,000
Notes payable	0
Accounts receivable	+148,000
Cash	+12,000

a. Using the information? given, calculateany change in net working capital that is expected to result fromthe proposed replacement action.

b. Explain why a change in these currentaccounts would be relevant in determining the initial investmentfor the proposed capital expenditure.

c. Would the change in net working capitalenter into any of the other cash flow components that make up therelevant cash? flows? Explain.

Answer rating: 100% (QA)

a To calculate the change in net working capital we sum up the changes in the current assets and sub... View the full answer