A new project would require an immediate increase in raw materials in the amount of $17,000. The firm expects that accounts payable will automatically increase $7,000. How much must the firm expect its investment in net working capital to increase if they accept this project?

A.) $17,000

B.) $7,000

C.) $10,000

D.) $24,000

Question

Business

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19 June, 03:30

A new project would require an immediate increase in raw materials in the amount of $17,000. The firm expects that accounts payable will automatically increase $7,000. How much must the firm expect its investment in net working capital to increase if they accept this project?

A.) $17,000

B.) $7,000

C.) $10,000

D.) $24,000

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Answers (1)

Know the Answer?

Brenda Mosley · Answer 1

C.) $10,000

Explanation:

Working capital is the net of current asset and current liabilities. it is a financial measure that gives insight into how liquid a company is.

Raw materials also known as Inventory and accounts payable are both current assets and current liabilities respectively hence, Incremental investment in working capital if the project is accepted

= $17,000 - $7,000

= $10,000