Which of the following statements regarding investment in working capital is incorrect?
A)investment in working capital, unlike investment in plant and equipment, represents a positive cash flow.
B)the cash flow is measured by the change in working capital, not the level of working capital.
C)the working capital may change during the life of the project.
D)working capital is recovered at the end of the project.

Question

Quizplus · Accepted Answer

Investment in working capital does not represent a positive cash flow. Rather, it represents an investment of cash that is tied up in the current assets needed to operate the project or business. The cash invested in working capital is recovered over time as the project generates positive cash flows.

Which of the Following Statements Regarding Investment in Working Capital