What effect is expected at the end of the life of a project that initially required a $20,000 increase in net working capital?
A) The $20,000 must now be paid by the firm.
B) The firm receives a $20,000 cash inflow.
C) Taxable income is reduced by $20,000.
D)No effects are expected because the $20,000 is now a sunk cost.

Question

Quizplus · Accepted Answer

At the end of a project, the initial increase in net working capital is typically recovered, resulting in a $20,000 cash inflow back to the firm. This recovery is part of the project's terminal cash flows.

What Effect Is Expected at the End of the Life