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NEW QUESTION: 1
Answer:
Explanation:
NEW QUESTION: 2
A. Option D
B. Option C
C. Option A
D. Option B
Answer: B
NEW QUESTION: 3
Lawson Inc. is expanding its manufacturing plant, which requires an investment of $4 million in new
equipment and plant modifications. Lawson's sales are expected to increase by $3 million per year as a
result of the expansion. Cash investment in current assets averages 30 percent of sales; accounts
payable and other current liabilities are 10 percent of sales. What is the estimated total investment for this
expansion?
A. $4.6 million.
B. $4.3 million.
C. $4.9 million.
D. $3.4 million.
Answer: A
Explanation:
Rule: The expansion of working capital (WC = CA-CL) is treated as an increase in investment. Choice "c"
is correct. $4.6 million estimated total investment for this expansion.
Choices "a", "b", and "d" are incorrect, per the above calculation.
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