Ivanhoe, Inc., is considering investing in a new production line for eye drops. Other than investing in the equipment, the company needs to increase its cash and cash equivalents by $15,000, increase the level of inventory by $35,000, increase accounts receivable by $12,000, and increase accounts payable by $40,000 at the beginning of the project. Ivanhoe will recover these changes in working capital at the end of the project 10 years later. Assume the appropriate discount rate is 7 percent. What are the present values of the relevant investment cash flows? Access Excel sheet bere O $22.636.17 O $29,484.26 O None of the Above O $33,551.05
Ivanhoe, Inc., is considering investing in a new production line for eye drops. Other than investing in the equipment, the company needs to increase its cash and cash equivalents by $15,000, increase the level of inventory by $35,000, increase accounts receivable by $12,000, and increase accounts payable by $40,000 at the beginning of the project. Ivanhoe will recover these changes in working capital at the end of the project 10 years later. Assume the appropriate discount rate is 7 percent. What are the present values of the relevant investment cash flows? Access Excel sheet bere O $22.636.17 O $29,484.26 O None of the Above O $33,551.05
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 4P
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