Question: please show step by step solution with origional equation The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an estimated
The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an estimated We of three years. The cost of the machine is $30,000 and the machine will be depreciated straight line over its three-year life to a residual value of $0. The cane manufacturing machine will result in sales of 2300 canes in vex 1 Sales are estimated to grow by 9% per year each year through year 3 The price per cane that Sisyphean will charge its customers is $17 each and is to remain constant. The canes have a cost per unit to manufacture of $10 each Instalation of the machine and the resulting increase in manufacturing capacity will require an increase in various net working capital accounts. It is estimated that the Sisyphean Corporation needs to hold 2% of its annual sales in cash, 5% of its annual sales in accounts receivable, 9% of its annual sales in inventory, and 5% of its annual sales in accounts payable. The firm is in the 35% tax bracket and has a cost of capital of 10% The change in net working capital from year 1 to year 2 is closest to: O A. a decrease of $422 OB. a decrease of 5387 OC. an increase of $387 OD. an increase of 5422
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
