A New Project Would Require an Immediate Increase in Raw

question 49

Multiple Choice

A new project would require an immediate increase in raw materials in the amount of $1,000. The firm expects that accounts payable will automatically increase $800. How much must the firm expect its investment in net working capital to change if they accept this project?

• A) +$1,800
• B) +$200
• C) −$200
• D) −$1,800

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Definitions:

U.S. Income Tax Code

The body of laws and regulations that govern how individuals, businesses, and other entities are taxed by the federal government of the United States.

Pension Fund Contributions

Payments made into a pension fund by employers, employees, or both, intended to finance future benefit payments to retirees.

Pension Plan Sponsor

The entity, typically a company or employer, that sets up and maintains a pension plan for the benefit of its employees.

Pension Funding Ratios

Measures the financial health of a pension plan by comparing the plan's assets to its liabilities.