Diswo Inc. needs to maintain 15% of its sales in net working capital. Lottie's is considering a 3-year project which will increase sales from their current level of $110,000 to $135,000 the first year and $145,000 a year for the following two years. What amount should be included in the project analysis for the last year of the project in regards to the net working capital?
A) -$35,000
B) -$5,250
C) $0
D) $5,250
E) $35,000

Question

Quizplus · Accepted Answer

At the end of the project, the net working capital is released, so the amount included is the difference between the initial and final net working capital, which is $5,250.

Diswo Inc Needs to Maintain 15% of Its Sales in Net