In Addition to a One Million Dollar Acquisition Cost,an Investment

question 120

Multiple Choice

In addition to a one million dollar acquisition cost,an investment requires $200,000 working capital during its useful years.This investment in working capital should be:

• A)Added to the cash outflow each year during the useful life of the investment.
• B)Disregarded in the capital budgeting decision because the working capital is not an expense.
• C)Treated as an immediate cash outflow that is recovered at the end of the investment's useful life.
• D)Treated as an immediate expense and a gain at the end of the investment's useful life.
• E)Added to the initial investment.

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Definitions:

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A medical device inserted through the nose and down into the stomach, used for feeding or removing stomach contents.