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The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an estimated life of three years. The cost of the machine

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The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an estimated life of three years. The cost of the machine le $30,000 and the machine will be depreciated straight line over its three-year life to a residual value of $0. The cane manufacturing machine will result in sales of 2100 canes in year 1. Sales are estimated to grow by 8% per year each year through year 3 The price per cane that Sisyphean will charge its customers is 516 each and is to remain constant. The canes have a cost per unit to manufacture of $8 each Installation of the machine and the resulting increase in manufacturing capacity will require an increase in various net working capital accounts. It is estimated that the Sisyphoan Corporation needs to hold 2% of its annual sales in cash, 4% of its annual sales in accounts receivable.9% of its annual sales in inventory and 6% of its annual sales in accounts payable. The firm is in the 20% tax bracket and has a cost of capital of 9% The change in net working capital from year 1 to year 2 is closest to O A. a decrease of $242 OB. a decrease of 5261 OC. an increase of $261 OD, an increase of $242

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