Net Working Capital

question 26

Multiple Choice

Net working capital:

• A) can be ignored in project analysis because any expenditure is normally recouped at the end of the project.
• B) requirements, such as an increase in accounts receivable, create a cash inflow at the beginning of a project.
• C) is rarely affected when a new product is introduced.
• D) can create either an initial cash inflow or outflow.
• E) is the only expenditure where at least a partial recovery can be made at the end of a project.

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Definitions:

Integrated Contracts

An integrated contract is a written agreement that constitutes the final and complete understanding between parties, encompassing all terms and conditions.

Parol Evidence Rule

A legal principle that prevents the parties to a written contract from presenting extrinsic evidence of terms of the agreement that contradict, modify, or vary contractual terms.

Written Agreement

A formalized contract between parties that is expressed in written form and signed to evidence the agreement.

Oral Agrees

Informal verbal agreements which may be legally binding if they meet certain criteria, despite the lack of written documentation, often depending on the context and jurisdiction.