Enabled: Final Exam

A divisional manager submitted a project proposal to the chief financial officer, complete with a calculated NPV for the project. The chief financial officer studied the proposal and pointed out that the divisional manager had failed to account for a one$-$time increase in net working capital of $$60,000$ that will be required $$ver the life of the seven$-$year project. Assuming the full value of net working capital will be recovered at the end of the project, how will the project's NPV change after making the chief financial officer's adjustment? Assume a discount rate of $9\%.$

Multiple Choice

The NPV will decrease by $$16,411.$

The NPV will decrease by $$32,822.$

The NPV will decrease by $$60,000.$

The NPV will not be affected.

None of the options are correct.

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