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.