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:

Physical Capital

Assets used in the production process that are tangible in nature, such as machinery, buildings, and vehicles.

Proprietary Knowledge

Information that is not public and is owned by an individual or company, giving them a competitive advantage.

Public Goods

Goods that are neither excludable nor rival in consumption.

Private Goods

Goods that are both excludable and rival in consumption.