Question

Some investment projects require that a company increase its working capital. Under the net present value method, the investment and eventual recovery of working capital should be treated as:

Answer 1

Answer:

Both an initial cash outflow and future cash inflow

Explanation:

Net value cash flow is the different cash flows that happens at different times. It takes into account the initial cash outflow or capital investment and the amount that it would be getting in the future that is the future cash inflow.

The net present value gives us a difference between cash inflows and cash outflows in their present values over a period of time.