One Should Consider Net Working Capital (NWC)in Project Cash Flows

question 17

Multiple Choice

One should consider net working capital (NWC) in project cash flows because

• A)typically firms must invest cash in short-term assets to produce finished goods.
• B)NWC represents sunk costs.
• C)firms need positive NPV projects for investment.
• D)inclusion of NWC typically increases calculated NPV.

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Definitions:

Horizontal Axis

The x-axis in a graph, typically representing the independent variable in data presentations and analyses.

Government Budget

An estimate of income and expenditure for a set period of time, outlining the financial plans and priorities of a government.

Nominal Interest Rate

indicates the percentage increase in money that the borrower pays the lender, not taking into account the eroding effects of inflation on the real value of the money.

Inflation Rate

The percentage rate at which the general level of prices for goods and services is rising, eroding purchasing power over time.