If a firm expects to increase its investment in inventory due to a prospective project, then this is an example of an incremental capital expenditure.

Question

Quizplus · Accepted Answer

Investment in inventory for a project is considered a change in working capital, not a capital expenditure. Capital expenditures refer to funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, or equipment.

If a Firm Expects to Increase Its Investment in Inventory