Sales for Year 2 of the New Project Are Expected

Multiple Choice

Sales for year 2 of the new project are expected to increase by 10%. Current assets are expected to increase by 17% for every dollar increase in sales while accounts payable are expected to increase by 6%. For year 2 the change in cash flows due to working capital will be:

A) +10% of sales.
B) -10% of sales.
C) +1.1% of sales.
D) -1.1% of sales.