Question

Arizona Food Supplies Corporation is considering an expansion to a new market. The expansion will cost $400,000 for new assets, another $25,000 for shipping and delivery costs, and another $70,000 for installation costs. In addition, $150,000 in net working capital will be needed immediately. Compute the net investment. a. $645,000 b. $745,000 c. $845,000 d. $545,000

Answer 1

a. $645,000

Step-by-step explanation:

Computation for the net investment

Using this formula

Net investment=New assets+ shipping and delivery costs, Installation costs+Net working capital

Let plug in the formula

Net investment=$400,000+ $25,000+$70,000+$150,000

Net investment=$645,000

Therefore the Net investment is $645,000