To Correctly Project Cash Flows, We Need to Consider All

question 18

Multiple Choice

To correctly project cash flows, we need to consider all of the factors EXCEPT

• A) use of assets or employees already employed by the firm.
• B) the likely impact that the new service or product will have on the firm's existing products' costs and revenues.
• C) the new product's or service's costs and revenues.
• D) All of these choices are correct.

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Definitions:

Book Value

The net value of a company's assets as recorded on the balance sheet, minus its liabilities and the par value of any outstanding shares.

Opportunity Cost

Opportunity cost is the value of the next best alternative foregone as the result of making a decision.

Variable Costs

Payments that are contingent on the amount of production or the scope of sales, covering expenditures like materials and labor.

Variable Costs

Costs that vary directly with the level of production output, such as raw materials and direct labor expenses.