Use the Information for the Question(s)below

question 77

Multiple Choice

Use the information for the question(s) below.
Epiphany Industries is considering a new capital budgeting project that will last for three years. Epiphany plans on using a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incremental cash flow projects:

-A firm is considering changing their credit terms. It is estimated that this change would result in sales increasing by $1 000 000. This in turn would cause inventory to increase by $150 000, accounts receivable to increase by $100 000, and accounts payable to increase by $75 000. What is the firm's expected change in net working capital?

• A)$325 000
• B)$175 000
• C)$250 000
• D)$1 175 000

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Definitions:

Venture Capital-Backed

Describes businesses that have received funding from venture capitalists, who invest in startups with high growth potential in exchange for equity.

Harvest

In a business context, refers to the act of selling off or extracting value from an investment at a profit.

Original Investment

The initial sum of money put into a project, business, or financial asset.

Venture Growth

The process of expanding a business venture in terms of operations, market share, and profitability.