Changes in the net working capital:
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) are included in project analysis only if they represent cash outflows.
D) are generally excluded from project analysis due to their irrelevance to the total project.
E) affect the initial and the final cash flows of a project but not the cash flows of the middle years.

Question

Quizplus · Accepted Answer

Changes in net working capital can affect the cash flows of a project each year of its life, as they represent the difference between current assets and current liabilities and can impact the cash inflows and outflows of the project. It is important to include these changes in project analysis to accurately assess the project's cash flow.

Changes in the Net Working Capital