Question

Ahmed & Co. is considering the purchase of a new piece of equipment to increase the production capacity. The equipment costs $100,000 plus $5,000 for installation and shipping. The resulting increased production is expected to require additional net working capital of $25,000. What is the initial investment that is required for this investment proposal?

Answer 1

Net investment is the main plus of working capital

Net investment=100 000+5 000+25 000=130 000