Changes in the Net Working Capital

question 178

Multiple Choice

Changes in the net working capital:

• A) Can affect the cash flows of a project every year of the project's life.
• B) Only affect the initial cash flows of a project.
• C) Are included in project analysis only if they represent cash outflows.
• D) Are generally excluded from project analysis due to their irrelevance to the total project.
• E) Affect the initial and the final cash flows of a project but not the cash flows of the middle years.

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Definitions:

Opportunity Cost

The lost potential gain from other alternatives when one alternative is chosen.

Potential Benefit

The prospective advantage or gain that may be realized from a specific action or decision, often considered in planning and analysis.

Probability

A quantitative assessment of an event's probability, given as a number from 0 to 1.

Choosing

The act of selecting from a number of alternatives or possibilities.