Q1. In the NPV computations, we see something called working capital. What is wo
ID: 2410789 • Letter: Q
Question
Q1. In the NPV computations, we see something called working capital. What is working capital? Why do we consider it in the NPV computations?
Q2. Many companies have outsourced customer service and/or call centers. Locations these services are now provided range from somewhere in the United States to foreign countries where wages are lower. What is your opinion on how quality has been, perhaps, compromised by this move?
Q3. Comment on the benefits and drawbacks of discounted versus nondiscounted methods
Explanation / Answer
Answer to 1.
The NPV is difference between present value of incoming cash flow and outgoing cash flow. Increase/decrease in working capital affects the cash flow which results in change in NPV.
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