Question

which one of the following is not part of the estimated net investment for a capital budgeting project? group of answer choices the cost of purchasing or constructing the project's assets the working capital requirements the estimated salvage value of the new assets at the end of their 10-year expected economic life the immediate increase in net working capital required by the project the cost of new assets required by the project the after-tax salvage value of assets to be replaced by the project

Answer 1

The working capital requirements is not part of the estimated net investment for a capital budgeting project.

Step-by-step explanation:

The working capital requirements is not part of the estimated net investment for a capital budgeting project.

The estimated net investment includes the cost of purchasing or constructing the project's assets, the estimated salvage value of the new assets at the end of their expected economic life, the immediate increase in net working capital required by the project, the cost of new assets required by the project, and the after-tax salvage value of assets to be replaced by the project.

However, the working capital requirements refer to the funds needed to cover the day-to-day operational expenses of a project, such as inventory, accounts receivable, and accounts payable, and it is separate from the net investment.