The "recovery" of an additional investment in working capital is assumed to:
A)Occur at the end of the project's life
B)Occur at the beginning of the project's life
C)Occur whenever the project first shows a profit
D)Be a sunk cost.

Question

Quizplus · Accepted Answer

The recovery of an additional investment in working capital is assumed to occur at the end of the project's life, as the working capital is needed to keep the project running smoothly until it generates sufficient cash flows to cover its ongoing operating expenses. The release of working capital is considered a cash inflow and is included in the project's terminal cash flow.

The "Recovery" of an Additional Investment in Working Capital Is