Determining the change in current assets, liabilities and Net working Capital of the firm by the new option. Introduction: The capital budgeting is the process of making huge investments by the firms to make their capital assets grow faster such as the building of new buildings, purchase of advanced costly machineries etc.

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Answer 1

Question

Chapter 11, Problem 11.10P

a)

Summary Introduction

To determine:

Determining the change in current assets, liabilities and Net working Capital of the firm by the new option.

Introduction:

The capital budgeting is the process of making huge investments by the firms to make their capital assets grow faster such as the building of new buildings, purchase of advanced costly machineries etc.

b)

Summary Introduction

To determine:

Why the current accounts are relevant in determining the initial investment of the proposed investment project.

c)

Summary Introduction

To determine: Whether the change in net working capital enter into any other cash flow that make up the Project's net cash flows.

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Samuels Manufacturing is considering the purchase of a new machine to replace one it believes is obsolete. The firm has total current assets of $927,000 and total current liabilities of $648,000. As a result of the proposed replacement, the following changes are anticipated in the levels of the current asset and current liability accounts noted. Account Change Accruals +$43,000 Marketable securities 0 Inventories −13,000 Accounts payable +86,000 Notes payable 0 Accounts receivable +151,000 Cash +12,000 a. Using the information given, calculate any change in net working capital that is expected to result from the proposed replacement action. b. Explain why a change in these current accounts would be relevant in determining the initial cash flow for the proposed capital expenditure. c. Would the change in net working capital enter into any of the other cash flow components that make up the relevant cash flows? Explain.

Samuels Manufacturing is considering the purchase of a new machine to replace one it believes is obsolete. The firm has total current assets of $921,000 and total current liabilities of $645,000.As a result of the proposed replacement, the following changes are anticipated in the levels of the current asset and current liability accounts noted. Account Change Accruals +$44,000 Marketable securities 0 Inventories −14,000 Accounts payable +94,000 Notes payable 0 Accounts receivable +151,000 Cash +15,000 a. Using the information given, calculate any change in net working capital that is expected to result from the proposed replacement action. b. Analysis of the prucchase of a new machine reveal and Increase or Decrease in the working capital? Is the increase or decrease treated as an intitial outlay and is a cost of acquiring the new machine. c. Would the change in net working capital enter into any of the other cash flow…

Answer 2

Question

Chapter 11, Problem 11.10P

a)

Summary Introduction

To determine:

Determining the change in current assets, liabilities and Net working Capital of the firm by the new option.

Introduction:

The capital budgeting is the process of making huge investments by the firms to make their capital assets grow faster such as the building of new buildings, purchase of advanced costly machineries etc.

b)

Summary Introduction

To determine:

Why the current accounts are relevant in determining the initial investment of the proposed investment project.

c)

Summary Introduction

To determine: Whether the change in net working capital enter into any other cash flow that make up the Project's net cash flows.

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Answer 3

Question

Chapter 11, Problem 11.10P

a)

Summary Introduction

To determine:

Determining the change in current assets, liabilities and Net working Capital of the firm by the new option.

Introduction:

The capital budgeting is the process of making huge investments by the firms to make their capital assets grow faster such as the building of new buildings, purchase of advanced costly machineries etc.

b)

Summary Introduction

To determine:

Why the current accounts are relevant in determining the initial investment of the proposed investment project.

c)

Summary Introduction

To determine: Whether the change in net working capital enter into any other cash flow that make up the Project's net cash flows.

Expert Solution & Answer

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Answer 4

Question

Chapter 11, Problem 11.10P

a)

Summary Introduction

To determine:

Determining the change in current assets, liabilities and Net working Capital of the firm by the new option.

Introduction:

The capital budgeting is the process of making huge investments by the firms to make their capital assets grow faster such as the building of new buildings, purchase of advanced costly machineries etc.

b)

Summary Introduction

To determine:

Why the current accounts are relevant in determining the initial investment of the proposed investment project.

c)

Summary Introduction

To determine: Whether the change in net working capital enter into any other cash flow that make up the Project's net cash flows.

Expert Solution & Answer

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Answer 5

Chapter 11, Problem 11.10P

a)

Summary Introduction

To determine:

Determining the change in current assets, liabilities and Net working Capital of the firm by the new option.

Introduction:

The capital budgeting is the process of making huge investments by the firms to make their capital assets grow faster such as the building of new buildings, purchase of advanced costly machineries etc.

b)

Summary Introduction

To determine:

Why the current accounts are relevant in determining the initial investment of the proposed investment project.

c)

Summary Introduction

To determine: Whether the change in net working capital enter into any other cash flow that make up the Project's net cash flows.

Answer 6

Chapter 11, Problem 11.10P

a)

Summary Introduction

To determine:

Determining the change in current assets, liabilities and Net working Capital of the firm by the new option.

Introduction:

The capital budgeting is the process of making huge investments by the firms to make their capital assets grow faster such as the building of new buildings, purchase of advanced costly machineries etc.

Answer 7

Chapter 11, Problem 11.10P

a)

Summary Introduction

To determine:

Determining the change in current assets, liabilities and Net working Capital of the firm by the new option.

Introduction:

The capital budgeting is the process of making huge investments by the firms to make their capital assets grow faster such as the building of new buildings, purchase of advanced costly machineries etc.

Answer 8

b)

Summary Introduction

To determine:

Why the current accounts are relevant in determining the initial investment of the proposed investment project.

Answer 9

b)

Summary Introduction

To determine:

Why the current accounts are relevant in determining the initial investment of the proposed investment project.

Answer 10

c)

Summary Introduction

To determine: Whether the change in net working capital enter into any other cash flow that make up the Project's net cash flows.

Answer 11

c)

Summary Introduction

To determine: Whether the change in net working capital enter into any other cash flow that make up the Project's net cash flows.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 11.1 - Prob. 11.1RQ Ch. 11.1 - What three types of net cash flows may exist for a...Ch. 11.1 - Prob. 11.3RQ Ch. 11.1 - Prob. 11.4RQ Ch. 11.2 - Explain how to use each of the following inputs to...Ch. 11.2 - How do you calculate the book value of an asset?Ch. 11.2 - Prob. 11.7RQ Ch. 11.2 - Prob. 11.8RQ Ch. 11.3 - Prob. 11.9RQ Ch. 11.3 - Prob. 11.10RQ

Solution Summary: The author explains the capital budgeting process of making huge investments by the firms to make their capital assets grow faster.

To determine:

Why the current accounts are relevant in determining the initial investment of the proposed investment project.

To determine: Whether the change in net working capital enter into any other cash flow that make up the Project's net cash flows.

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Chapter 11 Solutions

Solution Summary: The author explains the capital budgeting process of making huge investments by the firms to make their capital assets grow faster.

To determine: Why the current accounts are relevant in determining the initial investment of the proposed investment project.

To determine: Whether the change in net working capital enter into any other cash flow that make up the Project's net cash flows.

Want to see the full answer?

Chapter 11 Solutions

To determine:

Why the current accounts are relevant in determining the initial investment of the proposed investment project.