B. $5,000 C. -$9,000 D. $9,000 What is the effect on a firm\'s net working capit

Question

B. $5,000 C. -$9,000 D. $9,000 What is the effect on a firm's net working capital if a new project requires a +$30,000 increases in inventory, a $10,000 increase in accounts receivable, a $35,000 increase in facility investment, and a $20,000 increase in accounts payable? A. -$5,000 B. $10,000 C. $20,000 The ABC copy machine company sells their product for $10 million, the variable cost is 35% of its sales, fixed costs are $ 1.5 million and depreciation is $ 2 million. Assuming 35% corporation tax rate, what is the operating cash flow for the company?

Explanation / Answer

Calculate the effect on firm’s net working capital:

Therefore, the correct answer is option C. $20,000 ($30,000 +$10,000 -$20,000).

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