23- The balance sheet for a small firm is shown above. All amounts are in thousands of dollars. What is this firm's Net Working Capital? A- 132 thousand B- 44 thousand C- 2 thousand D- 88 thousand

24-

1	Year	0	1	2	3	4	5
2	revenues		13,000	13,000	13,000	13,000	0
3	costs of goods sold		-5,500	-5,500	-5,500	-5,500	0
4	gross profit		7,500	7,500	7,500	7,500	0
5	selling, general, administrative		-2,800	-2,800	-2,800	-2,800	0
6	depreciation		-1,500	-1,500	-1,500	-1,500	-1,500
7	EBIT		3,200	3,200	3,200	3,200	-1,500
8	income tax at 40%		-1,280	-1,280	-1,280	-1,280	600
9	incremental earnings		1,920	1,920	1,920	1,920	-900
10	add back depreciation		1,500	1,500	1,500	1,500	1,500
11	purchase of equipment	-7,500
12	subtract changes in NWC		-1,125	0	0	0	1,125
13	incremental fee cash flows	-7,500	2,295	3,420	3,420	3,420	1,725

Based upon the chart above, calculate Ripples NPV to the nearest whole dollar

Note - required return = 6%

Solution:

25- Marklabs must establish a new lab for testing purposes. They will rent the lab space but need to purchase $6.5 million of new equipment. The equipment will be depreciated using the straightline method over a 5year life. What is the annual depreciation ($) - round to the nearest whole dollar Solution:

Balance Sheet Assets Current Assets Liabilities Current Liabilities Cash .. 46 44 Accounts payable Total current liabilities Accounts receivable 24 44 Inventories 18 Total current assets 88 Long-Term Assets Long-Term Liabilities 162 166 Net property, plant, and equipment Total long-term assets Long-term debt Total long-term liabilities 162 166 Total assets 250 210 Notes payable Stockholders' Equity .... Total liabilities and stockholders' Equity 40 250