Use the Information for the Question(s)below

question 40

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 each year through year three.The price per cane that Sisyphean will charge its customers is $18 each and is to remain constant.The canes have a manufacturing cost 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 21% tax bracket,and has a cost of capital of 10%.
-The required net working capital in the first year for the Sisyphean Corporation's project is closest to:

• A)$3600.
• B)$3960.
• C)$2880.
• D)$5400.

---

Definitions:

White Paper

An authoritative report or guide that provides information or proposals on a specific issue, often used to educate readers or help people make decisions.

Instameets

Organised gatherings of Instagram users to meet in person, often to take photos and share them on the platform.

Instagram

A photo and video-sharing social networking service that allows users to upload content which can then be shared with followers or a select group of friends.

Photographers

Professionals or enthusiasts who take photographs using various types of cameras as a form of art or to capture moments.