20. Some investment projects require that a company expand its working capital to service the greater volume of business that will be generated. Under the net present value method, how should the investment of working capital be treated? Select one: a. An initial cash outflow for which no discounting is necessary. b. Both an initial cash outflow for which no discounting is necessary and a future cash inflow for which discounting is necessary. c. Irrelevant to the net present value analysis. d. A future cash inflow for which discounting is necessary.
20. Some investment projects require that a company expand its working capital to service the greater volume of business that will be generated. Under the net present value method, how should the investment of working capital be treated? Select one: a. An initial cash outflow for which no discounting is necessary. b. Both an initial cash outflow for which no discounting is necessary and a future cash inflow for which discounting is necessary. c. Irrelevant to the net present value analysis. d. A future cash inflow for which discounting is necessary.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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20.
Some investment projects require that a company expand its working capital to service the greater volume of business that will be generated. Under the net present value method, how should the investment of working capital be treated?
Select one:
a. An initial cash outflow for which no discounting is necessary.
b. Both an initial cash outflow for which no discounting is necessary and a future cash inflow for which discounting is necessary.
c. Irrelevant to the net present value analysis.
d. A future cash inflow for which discounting is necessary.
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