Wrangler Company Is Considering a Five-Year Project That Requires a Typical

question 65

Multiple Choice

Wrangler Company is considering a five-year project that requires a typical investment in working capital, in this case, $100,000. Consider the following statements about this situation:
I. Wrangler should include a $100,000 outflow that occurs at time 0 in a discounted-cash-flow analysis.
II. Wrangler should include separate $100,000 outflows in each year of the project's five-year life.
III. Wrangler should include a $100,000 recovery of its working-capital investment in year 5 of a discounted-cash-flow analysis.
Which of the above statements is (are) correct?

• A) I only.
• B) II only.
• C) III only.
• D) I and II.
• E) I and III.

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