QUESTION

9. Which one of the following would NOT result in incremental cash flows and thus should NOT be included in the capit

Category: Business
Subject: Finance
Due Date: 01/27/2016
Question Asked: 2016-01-27 18:19:23

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9. Which one of the following would NOT result in incremental cash flows and thus should

NOT be included in the capital budgeting analysis for a new product?

A) A firm has a parcel of land that can be used for a new plant site or be sold, rented, or used

for agricultural purposes.

B) A firm has spent $2 million on R&D associated with a new product. These costs have

been expensed for tax purposes, and they cannot be recovered regardless of whether the new

project is accepted or rejected.

C) A firm must obtain new equipment for the project, and $1 million is required for shipping

and installing the new machinery.

D) A firm can produce a new product, and the existence of that product will stimulate sales

of some of the firm’s other products.

E) A new product will generate new sales, but some of those new sales will be from

customers who switch from one of the firm’s current products.

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9. Which one of the following would NOT result in incremental cash flows and thus should NOT be included in the capit

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Posted on 2016-01-27 18:19:23

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...as spent $2 million on R&D associated with a new product. These costs have been expensed for tax purposes, and they cannot be recovered regardless of whether the new project is a...

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