Define the working capital and capital budgeting

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Working capital and capital budgeting.

Farbuck's Tea Shops is thinking about opening another tea shop. The incremental cash flow? (not including the working capital? investment) for the first five years is as? follows:

Initial capital cost = $3,500,000

Operating cash flow for each year = $1,000,000

Recovery of capital assets after five years=? $250,000

The hurdle rate for this project is 11?%. If the initial cost of working capital is ?$480,000 for items such as? teapots, teacups,? saucers, and? napkins, should? Farbuck's open this new shop if it will be in business for only five? years? What is the most it can invest in working capital and still have a positive net present? value?

Reference no: EM131585865

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