When Terminating a Project for Capital Budgeting Purposes,the Working Capital

question 23

Multiple Choice

When terminating a project for capital budgeting purposes,the working capital outlay required at the initiation of the project will

• A)not affect the cash flow.
• B)decrease the cash flow because it is a historical cost.
• C)increase the cash flow because it is recaptured.
• D)decrease the cash flow because it is an outlay.

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Definitions:

Investing Activities

Part of cash flow analysis that involves the purchase or sale of long-term assets and investment securities, reflecting a company's investment growth or reduction.

Net Operating Income

A measure of a company's profitability, calculated by subtracting operating expenses from gross profit.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity level.

Net Operating Income

The profit derived from a company's everyday operations, calculated by subtracting operating expenses from gross profit.