A Six-Year Project for East Nile,Inc

question 42

Multiple Choice

A six-year project for East Nile,Inc.results in additional accounts receivable of $150,000,additional inventory of $50,000,and additional accounts payable of $80,000 today.What is the change in the NPV of a project solely due to the additional net working capital (NWC) needs? Assume a 14% discount rate,and the recovery of net working capital at the end of the project.

• A) a decrease of $34,606
• B) a decrease of $42,670
• C) a decrease of $120,000
• D) a decrease of $58,689

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