A new project requires an increase in both current assets and current liabilities of $125,000 each.What is the overall impact on the net working capital investment?
A) An increase of zero
B) An increase of $125,000
C) An increase of $250,000
D) An increase of $62,500, when averaged over the life of the project

Question

Quizplus · Accepted Answer

The increase in current assets and current liabilities of $125,000 each cancel each other out, resulting in no overall impact on net working capital investment. Therefore, the answer is (A) an increase of zero.

A New Project Requires an Increase in Both Current Assets