Table 15.2 The company earns 5 percent on current assets and 15 percent on fixed assets. The firm's current liabilities cost 7 percent to maintain and the average annual cost of long-term funds is 20 percent.
-The firm's initial net working capital is ________. (See Table 15.2)
A) $15,000
B) $13,000
C) $5,000
D) $10,000

Question

Table 15.2  The company earns 5 percent on current assets and 15 percent on fixed assets. The firm's current liabilities cost 7 percent to maintain and the average annual cost of long-term funds is 20 percent.
-The firm's initial net working capital is ________. (See Table 15.2)
A) $15,000 
B) $13,000 
C) $5,000 
D) $10,000

Quizplus · Accepted Answer

Net working capital is calculated as current assets minus current liabilities. From the information provided (assuming Table 15.2 was given), if the correct answer is C) $5,000, it means current assets minus current liabilities equals $5,000.

Table 152 the Company Earns 5 Percent on Current Assets