Tokyo Food Supplies Corporation is considering an expansion to a new market. Tokyo Food Supplies has already conducted and paid $35,000 for a marketing survey. The expansion will cost $400,000 for new assets, another $25,000 for shipping and delivery costs, and another $70,000 for installation costs. In addition, $150,000 in net working capital will be needed immediately. Compute the net investment.

Question

Quizplus · Accepted Answer

The net investment is the total cost of the expansion minus any salvage value from the assets being replaced.

Total cost = $35,000 + $400,000 + $25,000 + $70,000 + $150,000 = $680,000

Since nothing was mentioned about any salvage value, we assume there is none.

Net Investment = $680,000 - $0 = $680,000

Therefore, the best choice is C because it is the only option that matches the calculation.

Tokyo Food Supplies Corporation Is Considering an Expansion to a New