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A company is considering purchasing a new machine, at a cost of $50,000. This amount will be written ...

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A company is considering purchasing a new machine, at a cost of $50,000. This amount will be written ...

A company is considering purchasing a new machine, at a cost of $50,000. This amount will be written off over 5 years at $10,000 per year. In the first year the company will have to increase its accounts receivable by $4,000, and inventory by $8,000. The disposal value of the machine being replaced is $1,500 and will be used to offset the amount borrowed for the new machine. What is the initial working capital investment required for the purpose of capital budgeting?
A) $8,000
B) $60,500
C) $10,500
D) $12,000
E) $4,000

Textbook

Cost Accounting: A Managerial Emphasis, Canadian Edition

Edition: 7^th

Authors: Horngren, Datar, Rajan, Beaubien

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pduvin Author

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6 years ago

I appreciate what you did here, answered it right Smiling Face with Open Mouth

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Thanks for your help!!

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