Question

The initial capital investment in a project requires a blank______ cash flow. the salvage value from a project involves a blank______ cash flow.

A) Positive, Negative
B) Negative, Positive
C) Neutral, Positive
D) Variable, Negative

Answer 1

The initial capital investment suggests negative cash flow, while salvage value involves positive cash flow, so the answer is B) Negative, Positive.

Step-by-step explanation:

The initial capital investment in a project requires a negative cash flow because it represents money going out as an investment. Conversely, the salvage value from a project involves a positive cash flow as it signifies a return or recovery of value at the end of the project's life. Therefore, the correct answer to the student's question is: The initial capital investment in a project requires a negative cash flow. The salvage value from a project involves a positive cash flow. So, the complete answer would be B) Negative, Positive.