Solved

Use the Information for the Question(s) Below

question 52

Multiple Choice

Use the information for the question(s) below.
The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an estimated life of three
years. The cost of the machine is $30,000 and the machine will be depreciated straight line over its three-year life to a
residual value of $0.
The cane manufacturing machine will result in sales of 2000 canes in year 1. Sales are estimated to grow by 10% per year for
each of the three years. The price per cane that Sisyphean will charge its customers is $18 each and is to remain constant. The
canes have a cost per unit to manufacture of $9 each.
Installation of the machine and the resulting increase in manufacturing capacity will require an increase in various net
working capital accounts. It is estimated that the Sisyphean Corporation needs to hold 2% of its annual sales in cash, 4% of its
annual sales in accounts receivable, 9% of its annual sales in inventory, and 5% of its annual sales in accounts payable. The
firm is in the 30% tax bracket and has a cost of capital of 10%.
-The change in net working capital from year 1 to year 2 is closest to:

Definitions:

Privatization

The process of transferring ownership or the operation of services and assets from the government to the private sector.

Neoliberalism

An economic and political approach advocating for free-market capitalism, minimal government intervention, and a reduction in public expenditure for social services.

Public Services

Services provided by the government to people living within its jurisdiction, either directly or by financing private provision of services.

Stakeholder Model

A framework in business that emphasizes considering the interests of all stakeholders, including employees, customers, and the community, not just shareholders.