A new project requires an increase in both current assets and current liabilities of $125,000 each

Finance Dec 24, 2020

A new project requires an increase in both current assets and current liabilities of $125,000 each. What is the overall impact on the net working capital investment?

A. An increase of zero

B. An increase of $125,000

C. An increase of $250,000

D. An increase of $62,500, when averaged over the life of the project

Expert Solution

Net working capital = current asset-curren liabilities

=125000-125000

A is correct

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