a. The change in net working capital is $( ). Round to the nearest dollar)

b. Select the correct answer.

Explain why a change in these current accounts would be relevant in determining the initial investment for the proposed capital expenditure.

- Analysis of the purchase of a new machine reveals (a decrease/an increase) in net working capital.

- This (increase/decrease) should be treated as an initial outlay and is a cost of acquiring the new machine.

- Would the change in net working capital enter into any of the other cash flow components that make up the relevant cash flows?

(Yes/No), in computing the terminal cash flow, the net working capital (decrease/increase) should be reversed.

Change in net working capital calculation Samuels Manufacturing is considering the purchase of a new machine to replace one it believes is obsolete. The firm has total current assets of $927,000 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 + $42,000 Marketable securities Inventories - 12,000 Accounts payable +95,000 Notes payable 0 Accounts receivable + 149,000 Cash + 18,000 0