British Metals Is Reviewing Its Current Accounts to Determine How

question 77

Multiple Choice

British Metals is reviewing its current accounts to determine how a proposed project might affect the account balances.The firm estimates the project will initially require $81,000 in additional current assets and $57,000 in additional current liabilities.The firm also estimates the project will require an additional $8,000 a year in current assets in each of the first three of the four years of the project.How much net working capital will the firm recoup at the end of the project assuming that all net working capital can be recaptured?

• A)$105,000
• B)$24,000
• C)$48,000
• D)$68,000
• E)$81,000

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Definitions:

Purchase Cost

The total expense incurred to acquire an asset or service, including the price and additional charges.

Target Firm

A company that is the focus of a takeover or acquisition attempt by another company.

Joint Venture

A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task.

Co-Owned Entity

A business or property ownership arrangement where two or more parties hold a share or interest.