Initial Investment Outlay: Key Components and Calculation Methods | Test Prep

Understanding the Initial Investment Outlay in CFA Level 1 Exam

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Question

The initial investment outlay consists of which of the following?

I. Up-front costs of the project's fixed assets.

II. Flotation costs associated with raising the necessary capital.

III. Increases in net working capital.

IV. Present value of all interest expenses associated with the project capital.

Answers

Explanations

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A. B. C. D. E. F. G. H.

E

The initial investment outlay consists of up-front costs of the project's fixed assets and any increases in net working capital. Costs involved in raising the finances are not part of the initial outlay.

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