How Does Net Working Capital Affect the NPV of a Five-Year

Multiple Choice

How does net working capital affect the NPV of a five-year project if working capital is expected to increase by $25,000 and the firm has a 15% cost of capital?

A) NPV will increase by $9,322
B) NPV will increase by $12,571
C) NPV will decrease by $25,000
D) NPV will decrease by $12,571 t_o-$25,000 outflow
T₅-inflow, which has a present value of $12,429.42 (25,000/1.15⁵)