Which of the Following Should Be Considered When a Company

question 46

Multiple Choice

Which of the following should be considered when a company estimates the cash flows used to analyze a proposed project?

• A) The new project is expected to reduce sales of one of the company's existing products by 5%.
• B) Since the firm's director of capital budgeting spent some of her time last year to evaluate the new project, a portion of her salary for that year should be charged to the project's initial cost.
• C) The company has spent and expensed $1 million on R&D associated with the new project.
• D) The company spent and expensed $10 million on a marketing study before its current analysis regarding whether to accept or reject the project.
• E) The firm would borrow all the money used to finance the new project, and the interest on this debt would be $1.5 million per year.

---

Definitions:

Wilhelm Wundt

Known as the father of experimental psychology, he established the first psychology laboratory at the University of Leipzig in 1879.

Observable Behavior

Actions of an individual that can be seen or measured directly, as opposed to thoughts or feelings which are internal.

Inner Sensations

Personal feelings and perceptions that occur within oneself, often not observable by others.

American Philosopher

A thinker from the United States who contributes to the field of philosophy, dealing with subjects such as ethics, logic, metaphysics, and epistemology.