A Manufacturing Firm Is Planning on Expanding Its Existing Operations

question 15

Multiple Choice

A manufacturing firm is planning on expanding its existing operations. The expansion project is significant and will require the firm to house the expansion in a different location. The firm is considering building on a lot they own across town. The lot is currently vacant and it was paid for nearly 20 years ago. Given this information, which of the following statements is correct?

• A) The lot is not an incremental cash flow because it is not being utilized at this time.
• B) The lot is an incremental cash flow because it represents an opportunity cost.
• C) The lot is an incremental cash flow because it represents a sunk cost.
• D) The lot is not an incremental cash flow because it has already been paid for.

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Definitions:

Virtual Cash

Digital or electronic money used for online transactions, not physically tangible.

Electronic Impulses

Electrical signals used in the transmission or processing of data in various technologies and devices.

Forge's Indorsement

Fabricating or illegally replicating someone's endorsement or signature, often with fraudulent intent. This key-term seems incorrect; assuming it refers to "Forged Endorsement."

Recover

To obtain restitution or compensation for loss or injury through legal proceedings.