A new project would require an immediate increase in raw materials in the amount of $12,000. The firm expects that accounts payable will automatically increase $8,500. How much must the firm expect its investment in net working capital to change if they accept this project?
A) +$20,000
B) +$3,500
C) −$20,500
D) −$3,500

Question

Quizplus · Accepted Answer

The net working capital change is calculated as the increase in raw materials ($12,000) minus the increase in accounts payable ($8,500), which equals $3,500. This represents an increase in net working capital.

A New Project Would Require an Immediate Increase in Raw