Working capital is a frequent source of errors in estimating project cash flows.These errors include:
I.forgetting about working capital entirely;
II.forgetting that working capital may change during the life of the project;
III.forgetting that working capital is recovered at the end of the project;
IV.forgetting to depreciate working capital
A)I and II only
B)I,II,and III only
C)II,III,and IV only
D)I,II,and IV only

Question

Quizplus · Accepted Answer

Working capital is often overlooked in cash flow estimations, and it is important to remember that it can change during the project and is typically recovered at the end. However, working capital is not depreciated, so IV is incorrect.

Working Capital Is a Frequent Source of Errors in Estimating