In calculating the net initial investment cash flows, any increase in working capital required for the project should be included.

Question

Quizplus · Accepted Answer

Net initial investment cash flows include any increase in working capital required for the project. Working capital is the difference between current assets and current liabilities, and it represents the amount of funds that a company needs to operate on a day-to-day basis. Therefore, any increase in working capital needed for the project should be included in the calculation of net initial investment cash flows.

In Calculating the Net Initial Investment Cash Flows, Any Increase