Changes in the net working capital requirements:
A) can affect the cash flows of a project every year of the project's life.
B) only affect the initial cash flows of a project.
C) only affect the initial and final cash flows of a project.
D) are generally excluded from project analysis due to their irrelevance to the total project.
E) are excluded from project analysis as long as they are recovered when the project ends.

Question

Quizplus · Accepted Answer

Changes in net working capital requirements can affect the cash flows of a project every year of the project's life as they are related to the cash inflows and outflows associated with current assets and current liabilities. Therefore, they cannot be ignored and should be considered in project analysis.

Changes in the Net Working Capital Requirements