Question

A new project would require an immediate increase in raw materials in the amount $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?

Answer 1

increase in net working capital = $10,000

Step-by-step explanation:

given data

increase raw materials amount = $17,000

accounts payable automatically increase = $7,000

to find out

net working capital to increase

solution

we know here that net working capital is express as

net working capital = Current assets - Current liabilities ..................1

so put here value in equation 1

so

increase in net working capital = $17000 - $7000

increase in net working capital = $10,000