What effect is likely at the end of the life of a project that required a $20,000 investment in net working capital?
A) The $20,000 must now be paid by the firm.
B) The firm receives a $20,000 cash inflow.
C) Taxable income is reduced by $20,000.
D) No effects are expected because the $20,000 is now a sunk cost.

Question

Quizplus · Accepted Answer

At the end of the project, the investment in net working capital is no longer needed and can be recovered as a cash inflow. Therefore, the firm receives a $20,000 cash inflow.

What Effect Is Likely at the End of the Life