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If purchasing a piece of machinery requires a firm to keep $4,000 in additional inventory...

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Accounting

If purchasing a piece of machinery requires a firm to keep $4,000 in additional inventory on hand than it would normally require, this increase in inventory would be considered:

1. Irrelevant to the decision.

2. A cash inflow when the machinery is purchased and a cash outflow when the machinery is sold at the end of its life.

3. A cash outflow when the machinery is purchased and a cash inflow when the machinery is sold at the end of its life.

4. A cash outflow when the machinery is purchased and irrelevant when the machinery is sold at the end of its life.

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