The "recovery" of an additional investment in working capital is assumed to:
A) occur at the end of the project's life.
B) occur at the beginning of the project's life.
C) occur whenever the project first shows a profit.
D) be a sunk cost.

Question

Quizplus · Accepted Answer

The recovery of an additional investment in working capital is assumed to occur at the end of the project's life. This is because the working capital is typically needed at the beginning of the project to cover initial expenses such as raw materials and labor, and is gradually recovered over time as revenue is generated. At the end of the project, any remaining working capital can be recovered as a cash inflow.

The "Recovery" of an Additional Investment in Working Capital Is