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)can only affect the initial and the final cash flows of a project.

Question

Quizplus · Accepted Answer

Changes in the net working capital can affect the cash flows of a project every year of the project's life. This is because changes in net working capital represent changes in current assets and liabilities, which can impact a company's cash position. Therefore, it is important to account for these changes when analyzing a project's cash flows.

Changes in the Net Working Capital