1- For a new project, a company plans to invest $15,000 in inventory and $150,000 in fixed assets with a salvage value of $44,000. Accounts payable will increase by $13,000 and accounts receivable will increase by $8,000 when the project starts. Assets are depreciated straight line to zero over the 4-year life of the project. Taxes are 35%. Which of the following statements is correct concerning the cash flow in year 0?

A) $15,000 is a cash outflow from inventory.

B) $8,000 is a cash outflow from accounts receivable.

C) $13,000 is a cash inflow from accounts payable.

D) All of the above

E) None of the above

2- All else the same, project cash flows will increase when:

A) Capital spending for the project increases.

B) The projected sales resulting from the project increase.

C) The inventory requirements for a project increase.

D) All of the above.

E) None of the above.