A Firm Begins with Nominal Net Working Capital NWCᴺt-₁ =

question 10

Multiple Choice

A firm begins with nominal net working capital NWCᴺt-₁ = 200 and then increases it to NWCᴺt = 250.The price index increases from IXt-₁ = 144 to IXt = 166.Based on this information,what is the real investment in NWC in year t?

• A)9.51
• B)10.84
• C)30.12
• D)49.73

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Definitions:

Revaluation

The process of adjusting the book value of an asset to reflect its current market value.

Assets

Economic resources owned by a business or individual that are expected to provide future benefits.

Equity Decreased

A situation where a company's total owner's equity diminishes due to factors like dividends, losses, or withdrawals.

Liquidated

The process of converting assets into cash or cash equivalents by selling them in order to pay off debts or obligations.