Use the Table for the Question(s)below

question 54

Multiple Choice

Use the table for the question(s) below.
-You are considering adding a microbrewery onto one of your firm's existing restaurants. This will entail an increase in inventory of $8 000, an increase in accounts payables of $2 500, and an increase in property, plant, and equipment of $40 000. All other accounts will remain unchanged. The change in net working capital resulting from the addition of the microbrewery is

• A)$6 500.
• B)$10 500.
• C)$5 500.
• D)$45 500.

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Definitions:

Net Investment

The total amount spent by a company or economy on capital assets, minus depreciation. This indicates how much is being spent on new or replacement assets.

Accounts Receivable

Funds that customers owe to a business for products or services that have been provided but not yet compensated for.

Installation

The process of setting up and configuring hardware or software systems to make them ready for operation.

Earnings Before Taxes

An indicator of a company's financial performance calculated as revenue minus expenses, excluding taxes.