If a project is expected to increase inventory by $15,000, increase accounts payable by $10,000, and decrease accounts receivable by $1,000, what effect does working capital have during the life of the project?
A)Increases investment by $4,000
B)Increases investment by $5,000
C)Increases investment by $6,000
D)Working capital has no effect during the life of the project

Question

Quizplus · Accepted Answer

The net change in working capital is calculated as the increase in inventory ($15,000) minus the increase in accounts payable ($10,000) minus the decrease in accounts receivable ($1,000), resulting in a net increase of $4,000.

If a Project Is Expected to Increase Inventory by $15,000