Assume That Over the Life of Project X, Net Working

question 262

True/False

Assume that over the life of project X, net working capital is maintained at an amount equal to the
initial investment. If so, net working capital doesn't need to be included in the NPV computation,
since the outflow at time zero is exactly (as we generally assume) offset by an equal inflow at the
end of the project's life.

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Definitions:

Canadian Dollar

The official currency of Canada, often symbolized as CAD, which fluctuates in value on the foreign exchange market.

Euro

The Euro is the official currency of 19 out of the 27 European Union countries, known collectively as the Eurozone, and acts as one of the world’s major currencies.

Interest Rate Parity

Interest rate parity is an economic theory that suggests the difference between the interest rates of two countries is equal to the differential between the forward exchange rate and the spot exchange rate of their currencies.

Forward Rate

The predetermined rate at which two parties will exchange currencies on a future date, agreeing upon it in the present.