The Recapture of Net Working Capital at the End of a Project

question 151

Multiple Choice

The recapture of net working capital at the end of a project will

• A) increase terminal year free cash flow.
• B) decrease terminal year free cash flow by the change in net working capital times the corporate tax rate.
• C) increase terminal year free cash flow by the change in net working capital times the corporate tax rate.
• D) have no effect on the terminal year free cash flow because the net working capital change has already been included in a prior year.

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Definitions:

Cash Dividends

Payments made in cash to shareholders, typically derived from a corporation's earnings, as a way of distributing profits back to shareholders.

Fair Price

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Grow at

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Required Return

The minimum return an investor expects to achieve from an investment, considering its risk level.