Initial Investment Cash Flows 1.) Kornel kitchens wants to upgrade their computi
ID: 2707171 • Letter: I
Question
Initial Investment Cash Flows
1.) Kornel kitchens wants to upgrade their computing infrastructure. the required equipment costs $350,000. they will also need to pay $15,000 to ship the systems to their location and pay an additional $50,000 to get the systems up and running. They hope to sell some old computers and anticipate recieving $25,000 (after-tax) for the used equipment. What is the projects initial investement outlay (cash flow at time 0).
I THINK THE ANSWER IS $390,000. IF I AM CORRECT COULD YOU STILL TELL ME WHAT TO DO. PLEASE SHOW ALL WORK.
2.) kornel kitchens is considering a porject to launch a new line of kitchen cabinets. Most of kornel's customers pay on credit so accounts recievable are expected to inrease by $75,000. Inventory and accounts payable are also expected to increase by $45,000 and $15,000, respectively. What is kornel's initial investment outlay for net working capital.?
I THINK THE ANSWER IS $135,000. IF I AM CORRECT COULD YOU STILL TELL ME WHAT TO DO. PLEASE SHOW ALL WORK. I REMEMBER THAT CERTAIN THINKS ARE EXCLUDED FROM THINGS SO IF YOU COULD LET ME KNOW ABOUT THAT IT WOULD BE AWESOME!
3.) Vitex Vitamins is considering a project that will enable them to reduce net working capital. Specifically, they are considering an automated invetory control system that will enable them to reduce invetory by $80,000. They system is expected to have no impact on any other current asset or current liability accounts. What is vitex's initial cash flow for net working capital?
I THINK THE ANSWER IS $-80,000 IF I AM CORRECT COULD YOU STILL TELL ME WHAT TO DO. PLEASE SHOW ALL WORK.
Explanation / Answer
1) Equipment Cost (350,000) Shipping (15,000) Installation Costs (50,000) Cost Recovery 25,000 Total Cash Flow at 0 (390,000) 2) Increase in AR (75,000) Increase in Inventory (45,000) Increase in AP 15,000 Net Working Capital Requirement (105,000) 3) Initial Net Cash Flow for Working Capital 80,000 Positive amount as this is a cash inflow rather than a cash outflow