A Project Increases Accounts Receivable and Accounts Payable by $500,000

question 49

Multiple Choice

A project increases accounts receivable and accounts payable by $500,000.00 each. All other working capital accounts are unaffected. What is the project's effect on working capital?

• A)Working capital increases by $1 million.
• B)Cannot be calculated without considering accumulated depreciation.
• C)Working capital is unaffected.
• D)Working capital increases, but the amount cannot be determined.

---

Definitions:

Real Interest Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing and the true yield to the lender or investor, compared to the nominal interest rate.

Purchasing Power

The purchasing power of a currency, indicating the quantity of goods or services obtainable with one money unit.

U.S. Supply Shock

An unexpected event that suddenly changes the supply of goods or services in the U.S. economy, potentially affecting prices and leading to economic adjustments.

National Wage Rates

Standardized wage levels set or analyzed across a nation for various occupations or sectors, which can be influenced by government policy or economic conditions.