In Capital Budgeting Analysis, an Increase in Working Capital Can

question 47

Multiple Choice

In capital budgeting analysis, an increase in working capital can be shown as:

• A)A cash inflow at the beginning of the project
• B)An outflow at the beginning and an equal inflow at the end of the project
• C)An inflow at the beginning and an equal outflow at the end of the project
• D)A decrease in the initial amount invested

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Definitions:

Investment

Allocation of resources, typically money, in order to generate income or profit over time.

Selling Price

The amount of money a buyer pays to purchase a product or service from a seller.

Projected Sales

An estimate of the future sales figures for a product or service, based on historical data and market analysis.

Target Costing

A pricing method used to reduce the overall cost of a product over its entire lifecycle with the aim of meeting a specific cost objective.