A company needs an increase in working capital of $10,000 in a project that will last 4 years.The company's tax rate is 30% and its discount rate is 8%.The present value of the release of the working capital at the end of the project is closest to:

Question

Quizplus · Accepted Answer

The present value of the release of the working capital at the end of the project is $7,350. This is calculated as follows:PV = FV / (1 + r)^nPV = $10,000 / (1 + 0.08)^4PV = $7,350

A Company Needs an Increase in Working Capital of $10,000