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Consider the Following Statements About the Investment in Working Capital

question 15

Multiple Choice

Consider the following statements about the investment in working capital in a capital budgeting analysis:
I. Working capital often increases as the result of higher balances in accounts receivable or inventory necessary to support a project.
II. Working capital increases are sources of cash and should be included in a discounted-cash-flow analysis.
III. The time 0 cash investment in working capital is included in a discounted-cash-flow analysis as a cash outflow.
Which of the above statements is (are) correct?

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Definitions:

Moro Province

A geographic and administrative region in the Philippines, historically significant for its resistance against Spanish, American, and Japanese colonial rule.

American Rule

A legal principle that each party involved in a lawsuit covers their own attorney's fees, unless specific legislation or a contract states otherwise.

Resistance

Opposition or defiance against an authority or any controlling force.

Spanish-American-Cuban-Filipino War

Also known as the Spanish-American War (1898), this conflict involved the United States supporting Cuban and Filipino rebels against Spanish colonial rule, resulting in the U.S. acquiring territories like Guam, Puerto Rico, and the Philippines.

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