Jarrett Baker is the founder of an enterprise software company. By looking at his income statements over the past three years, you see that its working capital has declined from $42,400 in 2015 to $17,900 in 2016 to $3,100 in 2017. If this trend continues, in what ways could it jeopardize the future of his business?

You are the manager of a large crude-oil refinery. as part of the refining process, a certain heat exchanger (operated at high temperatures and with abrasive material flowing through it) must be replaced every year. the replacement and downtime cost in the first year is $165 comma 000. this cost is expected to increase due to inflation at a rate of 7% per year for six years (i.e. until the eoy 7), at which time this particular heat exchanger will no longer be needed. if the company's cost of capital is 15% per year, how much could you afford to spend for a higher quality heat exchanger so that these annual replacement and downtime costs could be eliminated?