Working Capital Is a Frequent Source of Errors in Estimating

question 24

Multiple Choice

Working capital is a frequent source of errors in estimating project cash flows. These errors include

• A)forgetting about working capital entirely and forgetting that working capital may change during the life of the project.
• B)forgetting about working capital entirely, forgetting that working capital may change during the life of the project, and forgetting that working capital is recovered at the end of the project.
• C)forgetting that working capital may change during the life of the project, forgetting that working capital is recovered at the end of the project, and forgetting to depreciate working capital.
• D)forgetting about working capital entirely, forgetting that working capital may change during the life of the project, and forgetting to depreciate working capital.

---

Definitions:

SEC

The U.S. Securities and Exchange Commission (SEC) is an independent federal government agency responsible for protecting investors, maintaining fair and orderly functioning of the securities markets, and facilitating capital formation.

Banks

Financial institutions that accept deposits from the public, offer various financial services, including loans, and ensure economic stability and growth.

U.S. Financial System

The complex of institutions, including banks, securities markets, and regulatory agencies, that facilitate the flow of capital and financial services in the United States.

Central Bank

The primary institution responsible for managing a country's currency, money supply, and interest rates, with a role often including acting as the lender of last resort.