CAF-7 · Chapter 13 · Question 6 of 15
How is an investment in 'Working Capital' treated at the end of a project's life in a standard Net Present Value (NPV) calculation?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) It is assumed to be fully recovered and is treated as a cash inflow in the final year
Explanation
Working capital (inventory and receivables) is tied up during the project but is not 'consumed' like machinery. At the end of the project, inventory is sold and receivables are collected, meaning 100% of the working capital investment is recovered as a cash inflow.
More Introduction to Project Appraisal MCQs
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