Question

Jeff's Stereos is expanding its product offerings which includes increasing the floor inventory by $150,000, increasing accounts receivable by $35,000, and increasing accounts payable by $90,000. The company will also spend $200,000 for a building contractor to expand the size of the showroom. What is the amount of the project's initial cash flow?

  

-$240,000

  

-$160,000

  

-$310,000

  

-$295,000

  

-$175,000

Answer 1

Initial Cash Flow is initial investment in project,

Initial Cash Flow = 150,000 + 35,000 + 200,000 - 90,000

Initial Cash Flow = -$295,000