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How should xyz treat the reduction

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Problem 1: A major difference between an investment in working capital and one in depreciable assets is that?

A. an investment in working capital is never returned, while most depreciable assets have some residual value.

B. an investment in working capital is returned in full at the end of a project's life, while an investment in depreciable assets has no residual value.

C. an investment in working capital is not tax-deductible when made, nor taxable when returned, while an investment in depreciable assets does allow tax deductions.

D. because an investment in working capital is usually returned in full at the end of the project's life, it is ignored in computing the amount of the investment required for the project.

Problem 2: XYZ Co. is adopting just-in-time principles. When evaluating an investment project that would reduce inventory, how should XYZ treat the reduction?

A. Ignore it.

B. Decrease the cost of the investment and decrease cash flows at the end of the project's life.

C. Decrease the cost of the investment.

D. Decrease the cost of the investment and increase the cash flow at the end of the project's life.

Reference no: EM132809422

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