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QUESTION

A new inventory system will immediately reduce inventory levels by $100,000.

A new inventory system will immediately reduce inventory levels by $100,000. If this reduction is permanent and the cost of capital is 13%, how does the net working capital change affect company value?

Select one:

A. NPV increases by $13,000.

B. Company value increases by $100,000.

C. Company value will not change.

D. Company value increases by $769,231.

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