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?
I only.
II only.
III only.
I and II.
I and III.
Solution
Option-E:- I & III is the correct answer ..100% sure .
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Consider the following statements about the investment in working capi.docx
1. 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?
I only.
II only.
III only.
I and II.
I and III.
A.
I
only.
B. II only.
C. III only.
D. I and II.
E. I and III.
Solution
Option-E:- I & III is the correct answer ..100% sure .
