Which One of the Following Would NOT Result in Incremental

question 10

Multiple Choice

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 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.
• 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 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.
• E) A firm can produce a new product, and the existence of that product will stimulate sales of some of the firm's other products.

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Definitions:

Behavioral Segmentation

The division of a market into groups based on consumer behaviors and purchasing decisions, allowing for more targeted marketing strategies.

Over 40 Weeks

A phrase indicating a time span longer than 40 weeks, often used in contexts such as project timelines, pregnancy, or financial performance tracking.

National Car Rental

A rental car agency based in the United States, providing vehicle rental services to customers worldwide.

80/20 Rule

A principle suggesting that 80% of effects come from 20% of causes, often used in business and economics to focus efforts on the most productive inputs.