All else constant, an increase in the days inventory held period will have what effect on...

All else constant, an increase in the days inventory held period will have what effect on the net present value (NPV) of working capital

a.	it depends
b.	decrease in NPV
c.	increase in NPV
d.	no change in NPV

Expert Solution

Increase in the day's inventory held will increase the Inventory requirement of firm. As inventory is part of working capital, it means working capital is increased.

Increase in working capital means more cash outflow. More cash ourflow will decrease Net present value of Working capital.

So an increase in the days inventory held period will

b, Decrease the NPV

jeff jeffy answered 2 years ago

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All else constant, an increase in the days inventory held period will have what effect on...

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