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27 July, 12:55

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?

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  1. 27 July, 13:18
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    increase in net working capital = $10,000

    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
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