A company needs an increase in working capital of $30,000 in a project that will last 2 years. The company's tax rate is 30% and its discount rate is 14%. The present value of the release of the working capital at the end of the project is closest to:

Question

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The present value of the release of working capital is calculated by discounting the $30,000 to be received at the end of 2 years at the discount rate of 14%. The formula is: PV = FV / (1 + r)^n = $30,000 / (1 + 0.14)^2 = $23,084.

A Company Needs an Increase in Working Capital of $30,000