When replacing old assets with new assets, it is safe to assume that working capital requirements will remain the same.

Question

Quizplus · Accepted Answer

When replacing old assets with new assets, working capital requirements may change depending on the type of asset being replaced and the new asset being purchased. For example, if the new asset requires higher operating and maintenance costs, then working capital requirements may increase. Similarly, if the new asset has a longer depreciation period, then working capital requirements may decrease. Thus, it is not safe to assume that working capital requirements will remain the same.

When Replacing Old Assets with New Assets, It Is Safe