Rupp Pumps is purchasing an extruder for $80,000. The extruder will require an expenditure of $12,000 for installation and $4,000 for training new operators. The new equipment will require an increase of $5,000 in inventory, $4,000 in accounts receivable, and $3,000 in accounts payable. What is the net investment for this project?
A) $108,000
B) $102,000
C) $98,000
D) $99,000

Question

Quizplus · Accepted Answer

The net investment for the project is calculated by adding the cost of the extruder, installation costs, training costs, and changes in working capital (inventory and accounts receivable increase the investment, while accounts payable decreases it). Thus, $80,000 + $12,000 + $4,000 + $5,000 + $4,000 - $3,000 = $102,000.

Rupp Pumps Is Purchasing an Extruder for $80,000