Kay's Nautique Is Considering a Project Which Will Require Additional

question 90

Multiple Choice

Kay's Nautique is considering a project which will require additional inventory of $128,000 and will also increase accounts payable by $45,000 as suppliers are willing to finance part of these purchases. Accounts receivable are currently $80,000 and are expected to increase by 10% if this project is accepted. What is the initial project cash flow needed for net working capital?

• A) $75,000
• B) $91,000
• C) $99,000
• D) $136,000
• E) $181,000

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Definitions:

Accrued Interest

Interest that has been incurred but not yet paid, often referring to bonds or loans.

Interest Rate

The percentage charged on a loan or paid on savings over a period of time, typically expressed annually.

Purchase Cost

Purchase Cost is the total expense incurred to acquire an asset or service, including the price paid and any additional charges necessary to put it into use.

Accrued Interest

Interest that has been incurred but not yet paid, often referring to the interest accruing on a bond between payment periods.