Net Working Capital

question 49

Multiple Choice

Net working capital:

• A)can be ignored in project analysis because any expenditure is normally recouped at the end of the project.
• B)requirements, such as an increase in accounts receivable, create a cash inflow at the beginning of a project.
• C)is rarely affected when a new product is introduced.
• D)can create either a cash inflow or a cash outflow at time zero of a project.
• E)is the only expenditure where at least a partial recovery can be made at the end of a project.

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Definitions:

Endowment

The total resources, including wealth, talent, or abilities, that individuals or institutions possess, which can influence their capacity to make economic decisions.

Alimony

Financial support paid by one ex-spouse to another after divorce, as ordered by a court.

Budget Line

A graphical representation that shows all possible combinations of two goods that a consumer can afford with their income level.

Net Seller

An entity or individual who sells more of a commodity, security, or other assets than they buy.