INTERMEDIATE FINAN.MGMT.(LL)-W/MINDTAP
INTERMEDIATE FINAN.MGMT.(LL)-W/MINDTAP
13th Edition
ISBN: 9781337817363
Author: Brigham
Publisher: CENGAGE L
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Chapter 13, Problem 3MC
Summary Introduction

Case summary:

Company S considering adding a new line to its product mix and the production line would be set up in unused space in the main plant. It has installed machinery which generates the incremental sales of $1,250 units per year.

Due to this the sale price and cost prices are increased by 3% and firm’s net working capital would have to increase by an amount equal to 12% of sales revenues.

To determine: Annual sales revenue and costs except depreciation and the reasons of considering the inflation while estimating cash flows.

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