Net working capital on project net present value

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Reference no: EM131933741

1. Net working capital is expected to increase by $25,000 over the 5-year life of a project. What is the effect of net working capital on the project’s net present value if the cost of capital is 15%?

a. NPV will not be affected because the $25,000 will all be recouped.

b. NPV will increase by $12,429.42.

c. NPV will decrease by $25,000.

d. NPV will decrease by $12,570.58

2. If the shareholders of an acquired firm capture all of the merger’s gain, then the:

a. Cost of the merger is zero.

b. NPV of the merger is zero.

c. EPS will increase.

d. Acquiring firm retains all merger benefits.

Reference no: EM131933741

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