1. All of the following are anticipated effects of proposed project. Which of these must be included in initial project cash flow related to net working capital?
i.An inventory decrease of $5,000
ii.An increase in accounts receivable of $1,500
iii.An increase in fixed assets of $7,600
iv.A decrease in accounts payable of $2,100
a. i and ii only
b. i and iii only
c. ii and iv only
d. i, iiand iv only
e. i,ii,iii and iv
2. Marshall's & Co. bought corner lot in Eglon City five years ago at cost of $640,000. Lot was currently appraised at $810,000. At the time of purchase, company spent $50,000 to grade lot and another $4,000 to build a small building on lot to house parking lot attendant who has overseen use of lot for daily commuter parking. Company now wishes to build new retail store on site. Building cost is evaluated at $1.2 million. What amount must be used as initial cash flow for this building project?
3. Walks Softly, Inc. sells customized shoes. Presently, it sells 10,000 pairs of shoes annually at average price of $68 a pair. It is thinking of adding lower-priced line of shoes which sell for $49 a pair. Walks Softly estimates it can sell 5,000 pairs of lower-priced shoes but will sell 1,000 less pairs of higher-priced shoes by doing so. Compute amount of sales that muts be used when estimating addition of lower-priced shoes?