Temporary Working Capital Is the Difference Between the Actual Level

question 15

Multiple Choice

Temporary working capital is the difference between the actual level of investment in ________ assets and the ________ working capital investment.

• A) short-term; permanent
• B) short-term; temporary
• C) long-term; permanent
• D) long-term; temporary

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Definitions:

Cash Inflows

The total amount of money being transferred into a business, typically from operating, investing, and financing activities.

Required Rate of Return

The minimum annual percentage earned by an investment that will induce individuals or companies to put money into a particular security or project.

Internal Rate of Return

A financial metric used to estimate the profitability of potential investments, calculated as the discount rate that makes the net present value of all cash flows from a particular project equal to zero.

Cash Flows

The net amount of cash and cash equivalents being transferred into and out of a business.