Investments in working capital:
A) are simply accounting entries and do not affect NPV.
B) do not matter because the cash is generally recovered when the project ends.
C) increase NPV because they make the project more valuable.
D) reduce project NPV.

Question

Quizplus · Accepted Answer

Investments in working capital reduce project NPV because they represent cash outflows that are not immediately recovered, thus reducing the present value of the project's cash flows.

Investments in Working Capital