Asked by Chih-Hsiang Chang on Jul 25, 2024
Verified
The immediate cash outflow required for this project would be:
A) $120,000.
B) $90,000.
C) $150,000.
D) $130,000.
Immediate Cash Outflow
Expenditures or payments that require immediate disbursement of cash from a business.
Working Capital
is the difference between a company's current assets and current liabilities, indicating its short-term financial health.
Salvage Value
Salvage value is the estimated residual value of an asset at the end of its useful life, reflecting its expected worth in secondary markets.
- Build knowledge on the basic principles of capital budgeting and the spectrum of approaches used in the evaluation of investment projects.
- Realize the critical role of supplementary working capital and its influence on investment initiatives.
Verified Answer
ND
Nischal DevkurranJul 28, 2024
Final Answer :
C
Explanation :
The immediate cash outflow required for this project would be the cost of remodelling plus the additional working capital, so $120,000 + $30,000 = $150,000. Therefore, choice C is the correct answer.
Learning Objectives
- Build knowledge on the basic principles of capital budgeting and the spectrum of approaches used in the evaluation of investment projects.
- Realize the critical role of supplementary working capital and its influence on investment initiatives.