Assume project X requires additions to net working capital in each year of its life, all to be recovered at the end. In this case, the present value of the net working capital recovery will exceed the total dollar outlays on net working capital.

Question

Quizplus · Accepted Answer

The present value of the net working capital recovery will be less than the total dollar outlays on net working capital because the recovery happens at the end of the project's life, and the value of money decreases over time due to inflation and opportunity cost.

Assume Project X Requires Additions to Net Working Capital in Each