1. Iota Inc. is considering taking on a project. At the initiation of this project, the company will experience an increase in accounts receivable of $50,000, a decrease in inventory of $10,000, and an increase in accounts payable of $15,000. What is the effect of these changes in net working capital on the projects cash flows?

Select one:

a. There is no effect as these are not incremental cash flows of the project.

b. Initial cash outflow to the project will decrease by $25,000.

c. Initial cash outflow to the project will increase by $25,000.

d. Initial cash inflow to the project will increase by $25,000.

e. Annual cash flow will decrease by $25,000.