Changes in the Net Working Capital

question 20

Multiple Choice

Changes in the net working capital:

• A) can affect the cash flows of a project every year of the project's life.
• B) only affect the initial cash flows of a project.
• C) are included in project analysis only if they represent cash outflows.
• D) are generally excluded from project analysis due to their irrelevance to the total project.
• E) affect the initial and the final cash flows of a project but not the cash flows of the middle years.

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Definitions:

Price Falls

A decrease in the cost of goods or services in the market.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in its price, with high elasticity indicating a significant response to price changes.

Sensitivity of Quantity

The responsiveness of the quantity demanded or supplied of a product to changes in its price or other factors.

Sensitivity of Price

The degree to which the price of a product or service impacts consumer demand or the quantity supplied.